BUSINESS is committed to continuing to work closely with authorities and other key stakeholders, to help find lasting solutions to the country’s economic challenges.
Speaking to The Financial Gazette this week, captains of commerce and industry also fended off accusations that many businesses were maintaining prices above current inflation and exchange rate levels.
The president of the Zimbabwe National Chamber of Commerce (ZNCC), Mike Kamungeremu, said business would continue to partner with the government and other role players in the quest for much-needed economic stability and growth.
He also argued that corporate greed was not a significant factor on the country’s current pricing crisis, adding that authorities needed to continue managing money supply growth tightly.
“I admit that there could have been a few cases of indiscipline and forward pricing by some companies, but I believe that the inflation that we saw was driven more by the weakening of the Zim dollar week in week out.
“Now that the rate has stabilised and is actually going down, we also urge all businesspeople to adjust their prices the same way that many responsible companies are doing. “To sustain the current stability, the government must continue with the tight monetary stance and manage money supply growth in the economy,” Kamungeremu told The Financial Gazette — the country’s number one business publication.
“However, we also urge them to strike a balance between managing that stability and paying contractors who have delivered goods and services so that they can continue operating.
“In addition, we urge them to clear the forex auction backlog and also pay exporters their surrender funds,” he added.
The president of the Confederation of Zimbabwe Industries (CZI), Kurai Matsheza, said there was a need for the country “to correctly identify the drivers of inflation before playing the blame game”.
“If we identify these drivers, the next step is to deal with them in a holistic manner to achieve lasting solutions,” he said.
Economist and former Reserve Bank of Zimbabwe (RBZ) monetary policy committee member, Eddie Cross, said it was unrealistic to expect prices to tumble quickly.
“Of course, the problem is that as the local dollar strengthens, prices will only come down slowly, and the authorities are anxious to hurry this up,” he said.
Economic analyst Victor Bhoroma said businesspeople were motivated by profit, and where there was an opportunity to maximise this, they would.
“However, we cannot leave the role played by the central bank in funding its quasi-fiscal operations through the printing of electronic money to credit exporters and fund government expenditure.
“Similarly, the absence of a market-driven exchange system means foreign currency is a commodity and always in short supply.
“The central bank must never allocate foreign currency to private businesses or persons. They should allow banks and bureaux de change to be the matchmakers.
“The central bank should also not finance government deficits or public expenditures. The government should contain its spending within taxable revenue or borrow,” Bhoroma said.
Economist Tarisai Pardon said it was too early to conclude that there was “greedflation since businesses are actually still recovering from the losses that they experienced in the previous month due to exchange rate volatility”.
“To restore normalcy, the government must not be reactionary, but should rather be proactive and make policies which most businesses have confidence in.
“The government must also stop too much artificial manipulation of the exchange rate and provide the necessary liquidity for the normal functionality of the exchange rate,” he said.
Rufaro Hozheri, another economist, argued that businesses continued to “act in a very rational manner”.
“It is incumbent on the authorities to convince businesses that there is no need to increase prices.
“To put things into perspective, the local currency on the official market has lost 86 percent of its value since the beginning of the year, even considering the current strengthening that we have been witnessing over the past few weeks.
“Any business in this climate … will try to cushion themselves and pass the burden to the final consumer. I believe it’s less of greedflation and more of just cushioning the businesses from sharp curves,” Hozheri said.
All this also comes after business said recently that it wanted comprehensive dialogue with the government to help find lasting solutions to the country’s economic challenges.
Speaking on independent national television station 3Ktv’s widely-followed news and current affairs programme, Vantage, Matsheza, said both companies and ordinary consumers were hurting from the current prices crisis.
This was just before the government announced its basket of recent policy interventions to stabilise the Zimbabwe dollar and inflation.
“We are all suffering as businesses, as individuals and as families because of the way things are and how our Zimbabwe dollar has been depreciating, particularly on the parallel market.
“Yes, when we talk of the auction market it is a different story, but most products in the country are priced based on the parallel market.
“This has been hitting every person living in Zimbabwe hard, particularly those who earn in Zimbabwe dollars,” Matsheza told 3Ktv.
“The reason we are suffering the way we are doing … is that our dollar has been losing value fast. This is one of the issues that we have to put our heads together and address.
“I am not saying that this will be easy, but we have to identify these issues and resolve them.
“I also indicated earlier that one of the puzzling factors is that of the US dollars that come here … many of them do not circulate in the country.
“As a banking system and as an economy, how do we encourage people to actually utilise those US dollars so that they go around and support the economy?
“The other issue, we have also been saying to the government is that … if they start encouraging certain statutory payments to be paid in Zimbabwe dollars, they will create the demand for Zim dollars,” Matsheza said further.
“Indeed, if the government can create an appetite for the Zimbabwe dollar, I am sure that this is one of the measures … that will make sure that we all hold the Zimbabwe dollar dear.
“All of us are in it together — the authorities, us as business and even as individuals at household level.
“We have to look at this thing holistically and put our minds together to find a solution around it,” Matsheza added.
The respected industrialist also said the volatility of the Zimbabwe dollar had unnerved business, whose fear was that re-dollarisation would sink most of the country’s manufacturing companies.
“Coming to full dollarisation, what it means is that local manufacturers will become uncompetitive. For us to produce against other countries will become very uncompetitive, and we may fail to access other markets.
“We will also be unable to defend our own local market because outside products will have easy access into the Zimbabwean market.
“This is the impact of re-dollarisation, and added to that … aggregate demand in the country will actually come down,” Matsheza also told 3Ktv.
He added that businesses, and especially the CZI, always found it worthwhile to continuously engage authorities on ways of improving the economy.
“I would say our relationship with the authorities is very good. We don’t have any difficulties with them. We listen to each other. We may differ here and there, but in a very respectful manner.
“I don’t think that there is a view that either party is there to undo the other. So, we are very close.
“We have our own input, our own views about certain policies, and we put forward our ideas and we do understand that some of those ideas may be accepted,” Matsheza further told 3Ktv.
He also said business was hoping that the fast-approaching national elections would be peaceful — warning that any violence would further foul up the operating environment.
newsdesk@fingaz.co.zw