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Mthuli Ncube moves to sniff out extortionist and speculative pricing by govt contractors

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By Alois Vinga

FINANCE Minister, Mthuli Ncube has launched a “witch-hunt” for government suppliers, who are pricing goods and services at extortionate rates for speculative purposes.

The malpractices have, in turn, destabilised the foreign currency exchange rate market.

The latest counter comes shortly after authorities employed a raft of policies to combat rising inflation on the back of a depreciating local currency, which lost much of its value between the period of May and July 2022.

Annual inflation rate which stood at 60,7% as at December 2021 jumped to 131% in May. The figure has more than doubled to the current 257% rate up to July 2022.

Responding to the instability, authorities enacted a cocktail of measures, which include the introduction of policies aimed at further strengthening the Reserve Bank of Zimbabwe foreign exchange auction, and hiking interest rates to discourage speculative borrowing. A novel invention of gold coins as a measure for alternative investment was also introduced onto the market.

Further analysis by the authorities showed that several Ministries, Departments and Agencies (MDA) were abusing the government’s economic purchasing power, estimated at 76% by accepting invoices pegged at prices pegged way above parallel market rates. The vice hinged on future anticipation of Zim$ value depreciation.

According to monetary authorities, funds received by such suppliers, often way before supplying the goods and services, were used to purchase foreign currency on the parallel market and in the process destabilized exchange rates.

Treasury has since enacted a policy directive to turn down such inflated invoices.

But in another update Friday morning, Ncube revealed that the government had further observed pricing frameworks adopted by suppliers are leading to extortionist pricing of goods and services supplied are not anchored on economic fundamentals.

“Furthermore, the government through the Treasury will be strict in enforcing measures to enhance economic stability and punitive measures shall be taken against officials found to be complicit to overpricing and procurement malpractices while suppliers will be blacklisted for future supply contracts,” the statement reads.

“All existing contracts are now subject to a value for money audit review before payments are made.”

The treasury boss said MDAs, through the various procurement management units, have not been exercising due diligence, particularly regards the value for money in terms of pricing.

“They have been simply following procurement rules to the letter, without due regard to established value for money practices already enshrined in the procurement laws of the country,” Mthuli added.

Such malpractices, Ncube said, have resulted in the rapid erosion of budgeted resources and hence the need for the government to come up with measures to deal with the menace.

“One of the key steps was the recent Treasury Circular issued to MDAs, which also followed the announcement by the Finance Ministry of the establishment of the value for money audit process to be embedded into the procurement cycle for all goods and services.”