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Zimbabwe veers closer to the brink as shortages worsen
Angus Shaw, Associated Press
July 09, 2007

http://www.iht.com/articles/ap/2007/07/09/africa/AF-GEN-Zimbabwe-Price-Crackdown.php

HARARE, Zimbabwe: Zimbabwe's economy veered closer to the brink Monday with no end in sight to chronic shortages of staple foods and gasoline, and predictions of a standstill in routine business within days.

Police and government inspectors continued cracking down on shopkeepers and sales managers accused of defying orders to slash prices by half in a desperate attempt to halt rampant inflation.

Shelves were bare of cornmeal, bread, meat and other staples, and witnesses said many shops and suppliers were cleaned out by convoys of ruling party supporters coming in after police and inspectors began enforcing the price cuts on June 26.

"The crunch can't be far off," said economist John Robertson.

Factories, stores and gas stations have been unable to replace goods sold at below the original cost. The sudden drop in prices has sparked panic buying, stampedes and near-riots by impoverished Zimbabweans.

Fuel stock have run out, putting an end to the long lines of cars at gas stations. On Monday, the government ordered private commuter buses to cut fares by three-fourths, promising bus owners they would be able to buy subsidized fuel from the state oil procurement agency. But many ignored the directive and simply abandoned their routes. Businesses reported higher absenteeism, with workers failing to arrive at their jobs.

"We are incurring huge losses. We can't go on like this for much longer," said one industrialist. "We won't be able to pay our VAT (value added tax), which runs into the billions each month.

"We'll have to lay off quite a number of our people very soon," he said. "We've shot ourselves in the foot this time."

He asked not to be identified. President Robert Mugabe warned Friday that the government would target uncooperative managers and seize factories that scaled down their operations.

More than 1,300 businesses have been charged and fined over the past two weeks for defying orders to slash prices in half or hoarding goods, police said.

Several of 33 top company executives arrested in recent days were fined up to 100 million Zimbabwean dollars (US $6,600; Euro 4,850), court officials said Monday.

Robertson, the economist, predicted that shortages would worsen dramatically across the board.

"Retailers who can't recover the money they spent on their goods are not going to carry them anymore, and manufacturers who are not allowed to charge more than their production costs are going to stop making them," he said.

By the end of next week, "we won't have much mobility anywhere and we will have run out of options" as gasoline tanks run dry and gas stations and stores go out of business, he said.

Last week, the government announced it was reviving the long-defunct State Trading Corp. to run businesses that had collapsed or were commandeered. The corporation itself collapsed in the 1980s through mismanagement.

Police spokesman Oliver Mandipaka said the crackdown was "not a gimmick and will be sustained at all costs to stop consumers being ripped off," state radio said.

Mandipaka appealed to rural villagers and farmers "to compliment government efforts by reducing prices of cattle so butcheries can operate viably," radio said.

Beef, a traditional favorite in the diet of Zimbabweans, disappeared from shops more than a week ago.

Cattle herds already have shrunk drastically since the seizures of thousands of white-owned farms disrupted Zimbabwe's agriculture-based economy in 2000.

Cattle are a status symbol in rural communities and often are used as a dowry. It was unlikely villagers who have resettled on former white-owned land would heed Mandipaka's appeal.

Live goats were being sold in Harare but goat meat has not appeared in butcheries and supermarkets. Women snapped up cabbages at one open air market.

"It's something to put on the table anyway," said one woman who only gave her name as Olivia. She said two large cabbages could be made to last about a week.

Official inflation is running at 4,500 percent - the highest in the world - though independent financial institutions estimate real inflation is closer to 9,000 percent.

The government accuses business leaders of being part of a political and economic campaign of "regime change" to bring down Mugabe.

It has admitted to printing extra money to pay its way - seen as a main cause of inflation and an obstacle to reports that South Africa could shore up Zimbabwe's collapsing dollar by pegging it to the South African currency.

Regional proposals to admit Zimbabwe to the southern African Common Monetary Area of South Africa's neighbors would entail fundamental market-linked economic reforms that Mugabe emphatically has rejected in the past.

Robertson said the nation faces the prospect of looting.

"I think the government will finally unleash the impatience and the anger of our normally agreeable and passive population," he said.

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