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Manna from heaven for a day
IRIN News
July 15, 2008

http://www.irinnews.org/report.aspx?ReportID=79260

"It was like the Biblical manna from heaven," a villager in Murombedzi, a rural district about 110km northwest of the Zimbabwean capital, Harare, recounted to IRIN after a truck with basic commodities at knock-down prices arrived at the almost abandoned shopping centre.

"Imagine, I managed to buy two litres of cooking oil for Z$1.5 billion [US$0.02 at an exchange rate of Z$65 billion to US$1], a bar of soap for Z$1 billion [US$0.01) and two kg of sugar for Z$800 million [US$0.008], when I would need at least Z$600 billion [US$9.25] to purchase the same items in a shop or the black [parallel] market," said Tariro Musanhi, 32.

Word spread fast that items like cooking oil, washing soap, sugar and salt were being sold at "give away prices", and a long queue quickly formed. A government official accompanying the truck told the gathering the delivery of basic goods at affordable prices was part of the government's new programme called "People's Shops".

After an eight-year recession, Zimbabwe's annual inflation rate - estimated by independent economists to be between one million and 10 million percent - means basic commodities are increasingly being sold on the parallel market for foreign currency, such as South African rands and Botswana's pula, and few items are available in shops.

"We were told that every week the truck would do the rounds in our villages, selling the items at very low prices to cushion us against rising costs caused by selfish manufacturers and wholesalers," Musanhi said, but after three weeks the people's shop has failed to return.

Pilot project
Gideon Gono, governor of the Reserve Bank of Zimbabwe (RBZ), told the official The Herald newspaper that the concept of people's shops — some mobile and others to be based at existing retail outlets - was designed to cater for vulnerable communities in rural and poor urban areas.

Gono was one of those cited by Britain and the US in a recent failed UN Security Council resolution to freeze the assets of 14 people among the elite of the ZANU-PF party, which ruled Zimbabwe for 28 years, for anti-democratic practices.

"Among ordinary people, especially the vulnerable elements, the availability of basic commodities at affordable prices is the key to the revival of our national economy," Gono said.

The "Basic Goods Accessibility Programme", of which People's Shops were the crucial element, had started "nationwide on a pilot basis" and was "going on very well", and Gono had "no doubt about the sustainability of the programme, because it is based on good business sense".

However, in the same edition of The Herald, he said: "The economy and politics are inextricably intertwined, such that it does not make sense for anyone to expect the RBZ to fix the national economy somehow and turn it around for the better, when political players continue to play bickering games over the way forward.

"Therefore, I cannot imagine, let alone proffer, any way forward in terms of reviving the economy, given the current situation that is not based on, and informed by, a political economy of national unity," Gono said.

Unsustainable
Others were less confident about the success of the "People's Shops" initiative. Economist Erich Bloch, based in Zimbabwe's second city, Bulawayo, and a former reserve bank consultant, expected the concept to be short-lived. "The government has no resources to fund the so called People's Shops and I don't see the programme lasting a long time," he commented.

"It is a political ploy to give the people the impression that the government is concerned about their welfare, and I get disturbed by reports that those benefiting are being asked to produce [ZANU-PF] party cards," Bloch told IRIN.

"In real terms, there are no benefits to the ordinary people, whether in the short term or long run. There is no capacity to supply to needy consumers adequately, and even if the reserve bank governor is saying it's a pilot project, there is no evidence that many people are benefiting."

Bloch said by buying the goods to stock the "People's Shops" from local manufacturers and the Grain Marketing Board (GMB), a parastatal company that holds a monopoly for purchasing cereals, the government would deprive other shops of commodities, thereby forcing them to either scale down or close.

Because President Robert Mugabe's government was buying commodities for resale at "below cost", the programme would create an imperative for the government to borrow more money, thereby increasing its debts, Bloch said.

Innocent Makwiramiti, another economist and former chief executive of the Zimbabwe National Chamber of Commerce (ZNCC), said the "People's Shops" programme was an "economically suicidal exercise meant to appease voters who the government promised a lot of things" before the recent elections, in which ZANU-PF lost it parliamentary majority for the first time since independence from Britain in 1980.

"Currently, even the manufacturers to whom the government is turning for supplies are operating well below capacity, with some of them showing signs of folding at any time. It would therefore take nothing less than a miracle for the shops to go on," Makwiramiti told IRIN. The Confederation of Zimbabwe Industries believes that industrial production has shrunk to less than a third of pre-2000 levels.

There is suspicion among informal traders that goods confiscated from them by the police were among the commodities being sold at the people's shops. "I guess it is like robbing from Peter to give to Jane," John Chinyani, a trader who sources rice from Mozambique for resale in Harare, told IRIN.

"The police have increased their raids on us and we don't know where the goods they take from us are going, and with this talk about People's Shops it is possible that we are being used as a source of free items for resale."

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