July 2007
"It was an act of madness," said a
manager at a Spar store in the low-income Harare suburb of Seke. "Ripple
effects will be felt for a long time in Zimbabwean business. Job losses
will be immediate."
Businesses in Zimbabwe are still reeling from President Robert Mugabe's
June 26 decision to slash the prices of all commodities by 50 percent, in
a bid to tackle skyrocketing inflation, which he claimed is being fueled
by the private sector to bring down his government. The move sparked a
stampede of shoppers, leaving companies with empty shelves. Many say they
may now be forced to close.
"This act is the latest in a long chain of irrational political decisions
Mugabe has taken in the past few years to keep himself in power,"
continued the Spar manager. "The next will most probably be the seizure of
mines and foreign-owned businesses which he is legitimizing through the
Economic Empowerment and Indigenisation Bill currently before parliament."
Zimbabwe's President Robert Mugabe has led the country since 1980.
Tichafa Chari, a schoolteacher in the same area, compared the latest move
to Operation Murambatsvina, the military-style demolition of urban
dwellings in 2005 which destroyed the informal sector and left 700,000
people homeless and two million with no source of income. It was believed
at the time that Mugabe did this to stem fears of a rebellion by the urban
poor that would unseat him.
"Operation Murambatsvina destroyed the informal sector, and now this is
destroying the formal sector. So where do we go from here?" said Chari.
Like Operation Murambatsvina, the current operation, according to Mugabe,
is to stop the formal sector from working with western powers wishing to
effect "regime change" in Zimbabwe.
Several senior company executives, many from companies headquartered
outside Zimbabwe, have been arrested and have spent nights in filthy
police cells for failing to comply with the government directive to reduce
their prices.
Long fuel queues are also back at the few service stations that have
received cheap fuel from the state-owned National Oil Company of Zimbabwe,
NocZim, which they are selling at 60,000 Zimbabwe dollars, ZWD, a liter,
(just under 50 US cents at black market prices) down from nearly 200,000
ZWD two weeks ago.
The fuel situation had stabilized after government allowed private
companies to import and sell fuel at rates determined by the black market
from which dealers obtained the foreign exchange to import.
A fistful of Zimbabwe currency is exchanged for a U.S. $10 bill on
the black market.
But since the price-slash directive, those service stations have run dry
and have not restocked. The government has ordered all service stations to
sell their fuel at 60,000 ZWD a liter but NocZim supplies are still very
low. The national fuel procurement company has promised to increase its
deliveries to service stations countrywide.
The public transport sector is almost grinding to a halt after government
ordered them to reduce their fares or face a cancellation of their
operating licences.
Government told public transport operatives at a meeting last week that if
one of their vehicles was caught over-pricing, officials would cancel the
licences of not just that one vehicle but of the whole fleet.
One city commuter bus operator said, "Really I cannot be working for the
government. It makes no sense to continue when I will be making such a
huge loss."
Motorists have also been affected as they cannot get fuel and are being
forced to either source from the black market or leave their cars parked.
Traffic on Harare's roads has been significantly been reduced over the
last week or so.
Zimbabweans initial excitement about the order to slash prices of basic
commodities by half has now been replaced by panic and desperation as most
retail outlets have begun to run out of goods.
The first casualties of the price slash were the butchers, which ran out
of the beef and pork within a few days of the directive. Most meat outlets
in Harare suburbs have either closed or are about to.
Highfield butcher Petros Mawoneke was on the verge of tears when asked
what effect the price reduction had had on him and his family.
"I just don't know for how long I will be coming to work if the situation
continues like this. I am afraid that one day, we will be told not to
report for work anymore because we are not selling anything at the moment.
Our suppliers are no longer supplying us," he said.
Mother and child in Epworth, a township outside Harare.
"I don't want to think about the worst - I am trying to be optimistic but
at the same time I need to be realistic. It will just kill me if I lose
this job. How will I feed my kids - already I am struggling and am only
able to provide one meal a day. The government needs to think about people
like us and put in measures to protect us."
In response to the beef shortages, the government last week revoked the
licences of all private abattoirs for refusing to continue supplying meat
and meat products. They had stopped slaughtering livestock in protest
against the slashing of prices which they say would bankrupt them.
Trade Minister Obert Mpofu said the Cold Storage Company, CSC, part owned
by the government, would now have the sole responsibility of slaughtering
livestock. The CSC, however, was already facing serious financial problems
and had been operating well below its capacity.
One of the largest outlets of pork products, Colcom Foods, has already run
out of everything except bacon, a few boxes of pork sausages, polony and
smoked ham, all of which are foods for the rich.
An employee at Colcom Foods said that the company did not know when the
next supplies were going to be delivered. Its general manager in Harare's
Workington industrial area was recently arrested together with 33 top
executives of other companies for allegedly ignoring the government
directive to reduce prices.
Long queues could be observed at TM Supermarket in Arcadia suburb, where
the prices of basic commodities like washing soap, washing powder,
Vaseline petroleum jelly and margarine were reduced by more than 100
percent. Reports say the situation is the same countrywide.
Thomas Madziva, who was queuing to buy slices of polony, also known as
bologna, and bread rolls for his breakfast, was irate.
"Why should I queue when all I want is polony? This is getting really
frustrating now. First it was the bread queues, now it's for everything -
this is absolute madness. Our relief was temporary - we should have known
this is where Mugabe's generosity would land us."
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