Zimbabwe government main culprit behind the price hikes, own inquiry says but Charamba disagrees

Zimbabwe government main culprit behind the price hikes, own inquiry says but Charamba disagrees

What about foreign goods?

Government has opened the gate for the import of basic goods, a way to punish what officials see as “indiscipline” by businesses.

But the survey says this is suicidal: “Removal of duty and licenses on imports of basic commodities will harm the local industry, particularly those producing; maize meal, tooth paste and washing powder. This primarily stem from the finding that these products are not competitive against imports. For Maize, the producer price set by government of US$325/ton is higher than the US$200/ tonne currently prevailing in countries such as South Africa and Zambia.”

The report found that local goods now dominate shop shelves, and warns that allowing imports will reverse this trend. It recommends: “Reverse the opening of imports in the short run to protect the gains once realised by the local industry on the following products; mealie meal, tooth paste and washing powder as this have a negative impact on NDS1 aspirations on domestication of local value chains.”

Lifting import restrictions won’t save the Zimdollar anyway. It may, in fact, increase demand for USD.

The report finds: “There is also likelihood of further depreciation of the Zimbabwean dollar as parallel market activities will increase as consumers exchange their ZWL to foreign exchange for them to be able to purchase imported goods. The net effect of this policy will likely be the acceleration of dollarisation in the country.”

Why are formal shops losing to informal retailers?

The informal traders pay manufacturers in USD upfront, while formal supermarkets pay in Zimdollars.

Says the report: “The formal retail shops are mainly sourcing their products in Zimbabwean dollars and settlement of accounts can be done in 15-60 days, which then discourages manufacturers and wholesalers of products to supply to the formal markets, especially when the Zimbabwean dollar is losing value.”

Because of the official exchange rate is overvalued, it is more expensive for consumers to buy in a supermarket than to buy outside from a street trader.- NewZWire

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