Economists Bemoan Zim’s Profiteering Indiscipline

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By Alois Vinga

TWO top economists have bemoaned the high level of indiscipline manifesting through unjustified price hikes which go far beyond input costs.

The two added moral suasion for national good is the only way forward in addressing this long-term problem.

The comments come when prices of most basic commodities have risen astronomical due to input costs in fuel and operating license fees among other issues as reflected by the 4.2% percent inflation surge in December 2020.

However, some traders are taking advantage of the latest wave of input costs by increasing their prices beyond the reach of many consumers.

Speaking to Business Monday, economist Prosper Chitambara called for discipline among traders and retailers.

“The tendency of profiteering exists among our businesses and in many cases the mark up prices are much higher than international best practices which state that increases must not surpass 30% of mark up,” he said.

He blamed poor competition in the markets saying sectors like telecommunication operators are enjoying duopoly, a practice which occurs when two companies control the market.

“Activating statutory bodies to investigate and hold businesses found guilty of malpractices can be implemented through holistic engagement of the private sector in the long term,” Chitambara added.

Persistence Gwanyanya accused unscrupulous traders of hoarding goods and reselling them taking advantage of price differences in the markets.

“Admittedly, there are some factors which leave companies with no choice except to increase prices, but it is important for traders to do so in line with justified reasons,” he said.

Gwanyanya said the Reserve Bank of Zimbabwe (RBZ) foreign exchange auction has done a lot to eradicate such malpractices and expressed optimism that going forward pricing discipline will likely position itself.

He said the surge in prices was not only being experienced in Zimbabwe as it had become an international norm triggered by the Covid-19 pandemic leaving Zimbabwe vulnerable as a net importer of most basic commodities.

“However, in some instances the urge to profiteer becomes visible in our markets as unscrupulous elements seize the opportunity to make a kill. Dealing with the problem requires government to continue fostering stability and engaging the corporate world through moral suasion in order for them to see the intended long-term national benefit,” he added.