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Indicators of an ailing economy
Media Monitoring Project Zimbabwe (MMPZ)
Extracted from Weekly Media Update 2004-18
Monday May 3^rd - Sunday May 9^th 2004

Barely three weeks after the government media hailed the Reserve Bank governor Gideon Gono’s monetary policy review statement as the tonic for the country’s economic ills, symptoms of economic recession littered media space in the week. Even the government Press, which so assiduously assures the public of the country’s economic recovery, gave the game away when they increased their cover prices, attributing the hikes to increased production costs including newsprint.

The week also witnessed an increase in the price of a loaf of bread from about $2,000 to $2,900, The Herald (5/5), Radio Zimbabwe (5/5, 1pm), Power FM (5/5, 1pm), and The Manica Post (7/5). In their reports, these media quoted bakers justifying the bread price hike by citing the increase in the price of flour from $2,5 million to $3,4 million dollars a tonne. Other factors such as increases in wages, electricity, transport and spare parts were also cited.

However, the government media merely presented these problems as peculiar to the baking industry and not representative of the broader economic environment.

The Sunday Mail claimed that price increases were not justified because of the "decline in the country’s inflation rate and the cheap funds being made available to the manufacturers through the Reserve Bank’s Productive Sector Facility".

The paper then tried to give the impression that government policies have resulted in phenomenal growth in the manufacturing sector. It quoted unnamed "retailers" as saying "manufacturers who increase prices unreasonably risk going out of business as there is increased competition" as "indigenous players are now venturing into manufacturing, with some of them even running promotions to outdo established manufacturers".

The same article quoted the Consumer Council of Zimbabwe (CCZ) calling on government to reintroduce food subsidies on basic commodities "to make them affordable". The implications of this were studiously avoided. In fact, the failure by the government media to examine the adverse effects of subsidies on the economy manifested itself in the manner they reported the increase in the producer price of maize.

ZBC (4/5, 8pm), The Herald and the Chronicle (5/5) announced that the government-run Grain Marketing Board would now buy a tonne of maize from farmers for $750,000 up from last year’s $300,000 a tonne while maintaining its selling price to millers at $400,000 a tonne and to drought-stricken areas at $9,000 a tonne.

However, none of them examined how this economically senseless decision would affect the fiscus. Neither did they examine the inflationary effects of offering resettled farmers free transport to ferry their produce to the GMB, The Herald (7/5).

The private media paid lip service to the issue. Nevertheless, they highlighted the continued erosion of workers’ incomes due to the recent price increases. For example, The Sunday Mirror (9/5) pointed out that although CCZ and the Central Statistical Office (CSO) use different figures to measure workers’ incomes, they both illustrated the difficulties workers are encountering. For instance, the conservative CSO figures show that a family of six, whose breadwinner earns a minimum wage of $47,696 "needs $475 525 a month for the food basket alone…" while CCZ figures put the poverty datum line at "$968 525 a month". The Tribune (7/5) carried similar CCZ figures.

The week also witnessed the Zimbabwean currency sliding from $5,200 to $5,333 against the US dollar. The Daily Mirror (5/7) attributed this to the central bank’s decision to allow the local currency "to operate in free market conditions". The paper (7/5) quoted an economist pointing out that this would result in increases in the price of most goods, including basic commodities. Said the economist: "All these changes will lead to demands for higher wages as price increases will erode the disposable income of workers and consumers and this will have an inflationary impact on the economy".

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