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Desperate times bring desperate measures
IRIN News
September 13, 2007

http://www.irinnews.org/Report.aspx?ReportId=74281

A new breed of entrepreneur has evolved in Zimbabwe's ever-deteriorating economy, adapted to take advantage of an environment characterised by food shortages and increasingly scarce basic commodities.

The new professionals are known as 'queuers', who buy goods at discounted prices as a result of forced government price cuts and resell them at a substantial profit on the illegal parallel market.

Martha Nyoni, 45, a widow and unemployed mother of five, recently joined the group. She says she has found a survival strategy that works, but acknowledges that somewhere down the line someone has to pay the price.

"We have no choice except to charge the high prices because we spend a lot of time in queues, and for those that do not want to queue, they have to pay for our time spent in the queues."

A family business

At the break of dawn Nyoni gets up, ties her 10-month-old baby on her back with a small blanket. As the family troop out of the two-roomed house they occupy in Zimbabwe's second city, Bulawayo, she issues instructions and hands each of the children a wad of bank notes.

Today Nyoni will join a sugar queue in the city centre while her eldest son, Peter, will be looking for cooking oil at a local retailer. The eldest daughter and her younger sister will spend the day in bread and soap queues, while the youngest daughter minds the family stall outside the house. The stall sells anything they can get that is not readily available at the shops.

Government sell-out pays off, but only for some

Zimbabwean store shelves, previously stocked with staples like sugar, cooking oil, maizemeal, margarine, bread and flour, have been bare since President Robert Mugabe's ZANU-PF government ordered price controls two months ago and started imprisoning retailers who did not comply.

In a bid to cap rampant inflation - which, according to official estimates, has rocketed beyond 7,000 percent - businesses were forced to slash prices by 50 percent. The International Monetary Fund (IMF) has estimated that Zimbabwe's inflation will breach 100,000 percent by December this year.

The sudden drop in prices sparked panic buying, stampedes and near-riots by impoverished Zimbabweans; so far three people have died in countrywide food stampedes. Scores of factories and stores, unable to replace stock they were forced to sell below the original cost, have been forced to close.

However, the queuers have been taking advantage of the ensuing economic mayhem to make a killing out of the desperation of others, doing brisk business buying goods at government-controlled prices and selling them on the parallel market at an exorbitant markup.

Opportunistic buyers like Nyoni work with a network of supermarket managers and factory supervisors, and know what goods will be available at which shops on a given day. They usually also pay shop managers to allow them to buy more goods if quantities are restricted. Some shop managers even sell goods through the back door to be sold on the parallel market.

"We sell the goods on the black market and share the profit with the supermarket managers ... dealing with supermarket managers has the added advantage that one always has goods that are in demand," Nyoni said.

Parallel markets and parallel imports: consumers pay the price

The practice of queuing has grossly affected working-class people, who do not have the time to stand in line for hours every day in the hope of obtaining basic foodstuffs. Bread officially costs Z$22,000 (US$0.16 at the parallel market rate of US$1 to Z$140,000) but fetches over Z$60,000 on the informal market.

Eric Bloch, an economist based in Bulawayo, Zimbabwe's second city, in the southwest of the country, said as long as the government continued to implement skewed economic policies, there would be queues and a parallel market.

"The government should remove constraints affecting industry from functioning normally, and the first stop is to remove price controls, which are affecting production," Bloch told IRIN. "As long as there are shortages on the market, the black market will continue to thrive."

Most manufacturers were producing goods for export to neighbouring countries like Botswana, Zambia and Malawi, because profit margins on goods for local consumption were restricted, he said. "Zimbabweans bring the same goods back into the country for sale on the black market at six times the official price."
Even when basic commodities were available locally, they were no longer available to everyone because "those that queue for goods locally hoard them", Bloch added.

The Confederation of Zimbabwe Industries (CZI) warned that the country's industrial base was faced with total collapse as a result of the price controls.

But Industry and International Trade Minister Obert Mpofu told IRIN, "There is no going back on price controls. The shortages we are experiencing are temporary and companies should produce, and those that fail to do so will be taken over by the government."

The UN World Food Programme and Food and Agriculture Organisation issued a joint report on Zimbabwe in June, predicting that 4.1 million people, a third of Zimbabwe's 11.8 million people, would need food aid from the beginning of next year.

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