Friday, June 29, 2007

price controls lead to empty shops

Police spokesperson Chief Superintendent Oliver Mandipaka warned businesses that the police would arrest them without fear or favour if they engaged in illegal pricing activities. And police crackdown teams have been deployed countrywide to enforce the new regulations. Muchemwa said the mood in Harare is tense and described the standoff between government and businesses as war.

Muchemwa visited the traditional supermarkets such as OK, TM and Bon Marche around Harare and in the high-density areas. He said none of them were making bread. They had been ordered to sell each loaf for Z$22,000 when it costs them almost that amount to produce it. Our correspondent witnessed vendors who stand outside shops buying bread from bakers like Lobels at Z$40,000 per loaf. They in turn sold each loaf for a minimum Z$50,000.

Asked if people understand why businesses cannot reduce prices by 50% or more, as ordered by government, Muchemwa said many people do understand because they live with the hyperinflation and they sell tomatoes and other items themselves for profit. When that profit margin becomes zero, they raise the price again. But the ordinary person does not have access to government officials to allow them to express their frustrations so the shops and people who work in them are easy targets for their anger at the price increases.

Speaking at the burial of the late Army Brigadier General Armstrong Gunda Wednesday, Robert Mugabe threatened to take over all foreign companies, accusing them of hiking prices in a campaign to remove him from government. Critics say this is a diversion from the real issue, which is that he has no solution to the economic mess he created through the chaotic Land Reform Programme, and years of unchecked corruption and mismanagement.

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