Business gave a hostage to fortune

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By Joram Nyathi

IT WAS the same in business, the media and the opposition.

The response to the government’s crackdown on business for hiking prices of basic foodstuffs last week was notoriously familiar: Hang Mugabe.

The results were equally predictable: empty shelves and a burgeoning black market.

Nobody was bothered that the galloping prices were themselves stoking inflation faster than government spending and the printing of money by the Reserve Bank.

Nobody in the media bothered to ask the all-important question why business was suddenly in this frenzied bout to increase prices, all as if acting in concert.

On June 1, government, labour and business signed the protocol on price stabilisation. The social partners agreed to act in good faith and create a conducive business environment.

Government would cut expenditure, business would maximise productivity and make reasonable profit margins while labour would exercise restraint in its wage demands.

Prophets of doom were already at the altar telling us the social contract would not work before they had even read it. Government later raised the non-taxable benefit without forcing companies to increase workers’ wages. It has resisted calls for a supplementary budget, which Eric Bloch believes is long overdue.

Business’s response was a price madness without precedent in Zimbabwe. In two weeks, prices of some basic goods went up four-fold, wiping out overnight the tax benefit I hadn’t yet received. Those in the know told you prices were being pegged to the black market exchange rate of the US dollar.

The major fuel of the price spree was the so-called "replacement cost" of stocks. It was as if everyone wanted to be counted as having contributed a sterling effort to the attainment of 1 500 000% inflation by year-end. How much of this "replacement cost" went into the pocket of the toiling worker?"

The government might have overreacted in reversing all prices to June 18 levels. The cut in prices of 50% is irrational and therefore unsustainable, but that doesn’t take away the fact that business gave a hostage to fortune. Any government would have responded. Zanu PF is making political capital which may force some companies to close down and hurt the poor more.

But business was putting the same basic commodities that are now in short supply beyond my reach. Whether they were available in the supermarket, I was still denied their enjoyment because somebody felt they couldn’t forego a huge profit margin for the sake of the social contract. ZNCC president Mara Hativagone admitted as much last week.

Nobody doubts the cost of foreign currency. Nobody doubts the detrimental effects of pricing distortions on the market. Indeed, nobody questions government’s culpability in the entire economic mess. Unfortunately, that doesn’t diminish business’ failure to act with circumspection and in good faith. They knew the rate of inflation at the time of signing on June 1. They also knew that the social contract would not flood the country with foreign currency overnight.

Speaking in a radio programme soon after the contract was signed, Confederation of Zimbabwe Industries president Callisto Jokonya said with commitment from all partners, economic recovery was possible within three months. So what caused the price panic so soon after the signing? To me the social contract was never given a chance purely for political reasons, not because it was futile. We have grown to prefer foreign interventions ahead of local initiatives.

In any case, what is the value of business operations which our businessmen risk losing relative to the profit margins they could have foregone to meet their side of the bargain?

What I often find interesting is that while most of our businessmen will tell you in conversation that we are dealing with a mad government, they still go for a head-on collision. Land seizures and Operation Murambatsvina seem to have made no impression about the political leadership they are dealing with.

For opposition parties, the price escalations were celebration time. They served three purposes:

• As a demonstration of Zanu PF’s failure to run the country.

• Exposed Zanu PF’s failure to manage the economy.

• That the opposition was indispensable in the economic recovery.

None showed any sympathy for the starving worker. All waited breathlessly for food riots and chaos that would force Mugabe out. I was left wondering whether our nation still has a soul at all. Nowhere was this soullessness more evident than in a labour-based party failing to balance the interests of business with those of workers. Nothing was said about the gap between wages and the PDL as prices skyrocketed.

At the end of the day, what has been exposed is the myopia of both government and business. The government’s harsh response has predictably left supermarket shelves empty. On the other hand, relentless price escalations were a classic time bomb. They were bound to lead to a more catastrophic end. A starving nation staring at well-stocked shops will likely be tempted to loot before any political considerations. This could lead to the destruction of property and even loss of lives.

Nobody can deny the resentment among shop assistants as they are made to put fresh price mark-ups daily on goods they need for their families but can’t afford. Witness how they have been the first to provide incriminating evidence against their bosses to the price monitoring taskforce about hidden merchandise. It is what Mahatma Gandhi termed "commerce without morality".

Instead of trying to "fix" each other, isn’t this time for a sober reflection among the stakeholders in the national interest? There is a certain belligerence that is as futile as it is ill-conceived.

Joram Nyathi is the deputy editor of the Zimbabwe Independent newspaper

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