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Shortages and price hikes; Govt panics

13/11/2017 00:00:00
by Agencies
 
Threatening price controls .... Industry and Commerce Minister Mike Bimha
 
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THE government has moved to ease a ban on imports of basic commodities to avert shortages and threatened to impose price controls as the cost of goods continues to spiral.

Statutory Instrument 64 was last year put in place by the Zanu PF administration to prevent items such as groceries‚ building material and furniture from entering the country‚ in an attempt to stimulate domestic production.

But by June this year‚ government had climbed down‚ after "trade partners" like the South Africa Chamber of Commerce and Industry (SACCI) raised concerns.

Now‚ anyone with foreign currency can approach the government for an import permit.

Industry and Commerce Minister Dr Mike Bimha told journalists that anyone with‚ "free funds" can import as much as they wanted.

"Be they individuals or companies‚ they should come forward to obtain the necessary permits and licences to bring products into the market‚" he said.

However‚ the decision came a bit late‚ because retailers have been accessing South African products such as milk‚ cooking oil‚ cereal‚ detergents‚ biscuits‚ razor blades – to name but a few – from runners and smugglers‚ popularly known as “Omalayitsha”.

With the disappearance of hard currencies on the streets‚ retailers are forced to hike their prices‚ because buying rands using the local bond notes is expensive.

"The rand trades on an average of R100-$7‚ but against the local bond notes – which officially have the same value as the rand – it is R100-$11.

“Therefore‚ I need more bond notes to get my hands on the rand. To operate at a profit‚ I have to hike my prices every time the bond notes lose value‚" said a supermarket owner.

Other notable price increases have been on items such as sanitary pads‚ hair products‚ milk‚ whisky and even locally produced products such as bricks.

The minister said the government was monitoring prices of various commodities and had discovered that many sectors, including brick making, packaging and pharmaceuticals, had hiked prices without any justification.

"What is disturbing, though, is that some of these companies are companies that are getting a lot of support from government," he said.

Bimha said that to avert spiralling prices‚ he would approach parliament to introduce price controls.

However, that may not help. Economist Stevenson Dhlamini said: "Price controls will make goods only accessible on the black market at more expensive prices‚ because traders will factor in the risk allowance‚ since they will be prone to police raids."



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Between November and December‚ government workers will receive their bonus payments. With more disposable income‚ consumer behaviour will increase and so will the demand for foreign currency. Basic commodity prices will also increase.


 
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