Government plans to descend heavily on monopolies and cartels that are contributing to unjustified price increases of basic goods and services, in the process weakening the purchasing power of salaries and wages. Responding to questions from journalists yesterday during a post-Cabinet briefing, Finance and Economic Development Minister Professor Mthuli Ncube said Government was aware of the existence of cartels and monopolies in business and was crafting a matching response to the menace.
“We need to deal with issues of monopolies and cartels because they contribute to the price hikes . . .” said Prof Ncube.
He said some sectors of the economy were increasing prices for themselves while others were doing so in “collusion”.
“They need these price hikes which tend to be unwarranted most of the time. And now we know; actually, if you look at the food sector, the real pass-through — I am using a technical term in economics — within the movement of the exchange rate and inflation is only about 34 percent.
“It’s not a full translation, 100 percent, in terms of exchange rate movements, but it’s lower than that. So we are aware of this and one of the ways is to deal with it, it’s really to deal with monopolies and just in general, competition, as one of the strategies,” said Prof Ncube.
His revelation that there were cartels and monopolies in business comes on the back of yet another round of prices increases for maize meal, flour and beverages.
Government has argued that there was no reason for producers, wholesalers and retailers to peg their prices on the parallel market rate of forex, but rather, the rate of inflation.
The forex rate has risen to just over 1:8 on the parallel market in recent days compared to 1:5,5135 on the interbank market.
While the interbank market is still being fine-tuned by Government, some producers are already accessing forex from the market, but go on to peg prices on the basis of the parallel market rates.
Over the weekend, Industry and Commerce Minister Mangaliso Ndlovu told delegates to the Bulawayo Zanu-PF Youth League conference held at the party’s provincial headquarters, Davies Hall, that some top companies that used to get forex from the Reserve Bank of Zimbabwe are now frustrating the interbank market.
Minister Ndlovu said the companies used to thrive on the parallel market on the back of the funds provided by the RBZ and are unhappy with the new regime.
“We have sharks that are thriving on the black market and are doing all within their powers to suppress a smooth migration into a formal trading system where companies can access foreign currency from the interbank market.
“These are the same big guys who were big beneficiaries of the Reserve Bank of Zimbabwe system of forex allocation. They are now seeing a situation whereby everyone is equal in the market and all that one needs is his or her RTGS money to buy foreign currency on the interbank market.
“This is the reason why they are now resorting to putting spanners in the works so that the system fails,” he said.
Minister Ndlovu said it is disconcerting that the private sector advocated for the introduction of the interbank market, but some members are now working to defeat it.
He also said the indiscriminate price increases showed that companies were double-faced, always keen to effect price increases without increasing employee salaries and wages.
“We have seen an unfortunate scenario where companies are trigger happy to increase prices, but are not doing the same when it comes to workers’ salaries even when Government has maintained what the companies pay to it.
“That tells you that genuineness is lost in the process,” said Minister Ndlovu.
Source link : https://allafrica.com/stories/201906050158.html
Publish date : 2019-06-05 08:07:20