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Enquiry into Commodity Shortages and the Pricing System [S.C 11, 2006]
First Report of the Portfolio Committee on Foreign Affairs, Industry and International Trade
Presented to Parliament on May 31, 2006

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EXECUTIVE SUMMARY

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 urgently.

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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