Pricing system is ridiculous


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I still get goose pimples every time I think of a million dollars. I know it doesn’t buy much today but I just can’t psyche myself up to think of it as nothing.

You see, I belong to the generation that grew up in the era of pounds, shillings and pence. When we changed to dollars and cents, this was still real money, with our dollar stronger than the greenback.

We had only one millionaire in the district, George Nolan, the owner (as we knew it) of Bikita Minerals. It was an arithmetic challenge to calculate how Nolan had become a millionaire. We would sit down, count the number of trucks that delivered the mineral, how much each load earned and we often came up with the answer that it must have taken him at least 33 years to become a millionaire.

Thirty-three years was a long period for 10-year olds. Now I look back and wonder. Whatever happened?

Now everyone is a millionaire but that million buys nothing. I rarely question such things but I was really shocked when I went to this service station to look for fuel to find it selling for $215 000 a litre. I had to folk out $4.3 million for 20 litres. I started asking myself, when would all this end? How much would fuel cost by the end of March?

What pained me most was that there was a queue of motorists buying the fuel. I was quite certain they were as equally disturbed by the price as I was. It was not that the fuel was cheap. They had no choice. While some people still think driving is a luxury, owning a car is a basic right. The fact that 80 percent of the population is poor and can therefore never dream of owning a car is neither here nor there.

The sad thing is that the government uses this prevalence of poverty to further exploit the poor under the guise that it is trying to cushion them. Take the price of fuel for example. The government tells people that commuter taxis should not increase their fares because they are buying fuel at less than $23 000 a litre. Any motorist or commuter taxi operator knows that if one waits for this fuel, one will go out of business.

That fuel, like that meant for farmers, is not being sold to the intended beneficiaries but to chefs who in turn sell the fuel on the parallel market for 10 times the price they buy it for. In which other business, except perhaps banking, can one make more than 1 000 percent profit?

But while the government plays rich, the National Oil Company of Zimbabwe (NOCZIM) incurs a loss of $1 trillion. The taxpayer, that is you and me and even those in the rural areas who never ride commuter taxis and are still waiting to be resettled, is asked to pay the NOCZIM deficit.

The same applies to the Grain Marketing Board (GMB). It is selling mealie meal at ridiculously low prices which makes one wonder who is subsidising who? Most of the mealie meal is sold during working hours when workers are at work. It is bought by makorokoza (dealers), who do not pay any tax except perhaps value added tax. At the end of the day the makorokoza sell the mealie meal to workers at six times the price they bought it for.

The GMB makes a loss. And who foots the deficit? The same workers who bought the mealie meal at an exorbitant price while the mukorokoza laughs all the way to the shebeen.

Though I could not establish the trading deficit of the GMB as it appears it is no longer publishing annual reports that are usually available at newspaper libraries, its loss like that of NOCZIM, must be in trillions. The GMB is reported to be still selling maize to millers at $600 000 a tonne, the price of a 20kg bag of super refined mealie meal.

Surely, even bush economics dictates that this does not make sense.

Finance Minister Herbert Murerwa stated in his 2006 budget statement that price controls had led to price distortions which in turn had resulted in shortages of basic commodities on the open market.

“It will, therefore, be critical that market-pricing mechanisms, be embraced, which are central to ensuring the viability of industry, as well as the well being of consumers,” he said, way back in November.

He even pointed out: “The pricing system for all goods and services will be market driven in order to eliminate parallel market dealings…The removal of producer and selling price distortions especially for agricultural commodities and fuel will result in the efficient and effective utilisation of resources.”

But nothing has been done up to now, four months after the minister’s budget statement.

“This makes it difficult to understand why the government is dillydallying on implementing its own policies. But someone, somewhere must be benefitting from the system,” Zimbabwe National Chamber of Commerce President Luxon Zembe said. “And since those responsible for making and implementing policies will not do anything about it, this makes one think they are the ones benefitting.”

They must be. Central bank governor, Gideon Gono aptly summed it up when he blamed “chefs” for the current rot in the country when he presented his monetary review policy in January.

“If as a nation, we do not resolutely stamp-out corruption, especially among us people in positions of authority and influence, us the so-called chefs…… we will soon discover, too late, that policy formulations, implementation, monitoring and decisions have been based on self-interest, racial overtones, regional and tribal considerations at the expense of national good.”

No one, it appears, is ready to change yet because there are billions to be made.

 

(30 VIEWS)

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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