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into Commodity Shortages and the Pricing System [S.C 11, 2006]
of the Portfolio Committee on Foreign Affairs, Industry and International
Presented to Parliament on May 31, 2006
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The Zimbabwean economy
has been facing many challenges in the past few years. The major
challenges have been rising inflation (declared as the country’s
number one enemy), high interest rates, and low capacity utilization
in industry among others and resultantly low economic growth.
At the time of writing
the report, the economic challenges had manifested themselves in
the commercial sector, where goods, especially basic commodities
had disappeared from the shelves, consumers struggled to secure
mealie-meal, bread, milk, salt, cooking oil, and other necessities.
It was against this background, that your Committee resolved to
conduct an enquiry into basic commodity shortages and the pricing
system. There was consensus among the Committee members that the
matter required urgent attention and solutions had to be found,
as there appeared to be growing suspicion between the government
and industry as to the real cause of the problems.
During its enquiry, your
Committee received oral and written evidence from manufacturers
of the goods that are in short supply. Major stakeholders such as
the Consumer Council of Zimbabwe, the Competition and Tariff Commission
and representatives of labour were also consulted. Your Committee
conducted tours of some of the selected manufacturers in order to
assess the situation on the ground and expresses its gratitude to
all for the hospitality and co-operation extended to the Committee.
From your Committee’s
findings, a number of factors, all closely linked, need to be addressed
so as to overcome the commodity shortages. Manufacturers submitted
to your Committee that shortages of locally procured raw-materials,
foreign currency constraints for the importation of raw-materials
and machinery, fuel problems, electricity interruptions and an inefficient
rail transport system were some of the major challenges.
On the pricing system
for controlled products such as maize, wheat and flour, it was agreed
that there was need for price controls right across the chain of
production. On monitored goods, the problem with approval of prices
was that it took a long time and given the hyper-inflationary environment,
by the time they were approved they would have already been overtaken
by events. The Incomes and Pricing Commission should thus be constituted
After considering all
the submissions made, your Committee believes that there is need
to boost agricultural production through the timeous provision of
inputs such as fertilizers and seed. This should be complemented
by support services such as research and training programmes and
the establishment of long term, low cost finance to the farmers.
Admittedly, foreign currency
shortages are real, but your Committee implores the government to
prioritise manufacturers of basic commodities in the allocation
of foreign currency. The foreign currency used to import commodities
manufactured abroad could be used for the importation of products
that are not locally available.
There is also need for
close monitoring of products exported, at the expense of the domestic
market. Your Committee noted that sugar, detergents and other commodities
being smuggled out of the country, should be priced reasonably enough
to profit the manufacturer and satisfy the consumer.
There is need to prioritise
manufacturers of basic commodities in the allocation of fuel and
to find a lasting solution to transport problems associated with
the provision of services by the National Railways of Zimbabwe.
Your Committee acknowledges
that the problems the country is experiencing are not new. Similar
solutions have been suggested before at various fora and
have not been implemented. Concerns continue to be raised over the
non-implementation of some measures that could address some of the
problems the country is facing. Dialogue and collective effort should
be part of the process in ensuring that basic commodities are available
once again to the people at affordable prices.
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