The Zimbabwe African National Union-Patriotic Front Women’s League said it had drawn up a list of companies that were profiteering and threatened to seize control of these companies.
Information and Publicity secretary Nyasha Chikwinya said the companies were creating “artificial shortages” sabotaging central bank governor Gideon Gono’s efforts to contain inflation.
The United States embassy said ZANU-PF was trying to scapegoat private sector greed for its failure to keep inflation in check.
It said the Gono-inspired era of relative goodwill between the central bank and the private sector was coming to an unceremonious end.
Full cable:
Viewing cable 05HARARE525, GOZ THREATENS NEW PRICE CONTROLS
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This record is a partial extract of the original cable. The full text of the original cable is not available.
071332Z Apr 05
C O N F I D E N T I A L HARARE 000525
SIPDIS
AF/EX
AF/S FOR BNEULING
EB/IFD FOR FCHISHOLM
NSC FOR SENIOR AFRICA DIRECTOR C. COURVELLE, D. TEITELBAUM
TREASURY FOR OREN WYCHE-SHAW
DEPT PLEASE PASS TO ALL AFRICAN DIPLOMATIC POSTS COLLECTIVE
ALSO PASS TO USAID FOR MARJORIE COPSON
E.O. 12958: DECL: 12/31/2009
SUBJECT: GOZ THREATENS NEW PRICE CONTROLS
Classified By: Ambassador Christopher Dell for reasons 1.4 b/d
¶1. (SBU) Summary: The GOZ’s daily Herald led its April 6
edition with an exhortation from Industry and Trade Minister
Samuel Mumbengegwi to the private sector to rescind recent
price hikes. The Herald, as well as GOZ-aligned Mirror,
echoed these warnings in Thursday’s editorials. A ZANU-PF
official has also announced that the party’s Women’s League
has drawn up a list of “profiteering” companies to seize
control of. Fearing an uncertain commercial environment and
the reinstatement of price controls, which caused widespread
product shortages in 2003, Zimbabweans have been aggressively
stocking up on basic commodities. End Summary.
¶2. (C) Since it abandoned most price controls in mid-2003,
the GOZ has monitored prices but has mostly allowed retailers
to set them freely at any level. Firms tell us the GOZ has
reserved the right to approve price increases for a small
number of products, such as soft drinks. In these cases,
companies renegotiate new prices with the Industry and Trade
Ministry, resulting in temporary shortages while negotiations
stall.
¶3. (SBU) The Herald also said Secretary for Information and
Publicity Nyasha Chikinya of the ruling ZANU-PF’s Women’s
League has announced that her members were preparing to take
over companies that created “artificial shortages.” The
League has drawn up a list of companies to be seized,
according to the front page article.
¶4. (SBU) Thursday’s editorials in the Herald and Mirror were
similar, both alleging that the private sector is
“profiteering” by having increased many prices 100 percent
since the March 31 parliamentary elections. The papers
asserted that firms were creating shortages in order to boost
prices, undermining the efforts of Reserve Bank (RBZ)
Governor Gideon Gono to contain inflation.
Comment
——-
¶5. (C) Recent price hikes result from a first quarter
zimdollar depreciation of over 50 percent. The parallel
exchange rate, now used by most importers to purchase foreign
exchange, fell during January-March from Z$10,000 to
15,000:US$. Few importers have been able to access forex
through the RBZ’s twice weekly auctions at the preferential
Z$6,000:US$ rate.
¶6. (C) Since inflation has already almost certainly eclipsed
the 20-35 percent band for 2005 laid out by Central Banker
Gono on January 26 and repeated in daily ZANU-PF campaign
advertisements, it is possible the GOZ will begin to
scapegoat private sector greed for its failure to keep
inflation in check. In any event, it appears the
Gono-inspired era of relative goodwill between the RBZ and
private sector is coming to an unceremonious end.
Dell
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