Business gave a hostage to fortune
- From: "Zvakanaka" <lalapansi@xxxxxxxxx>
- Date: Fri, 13 Jul 2007 06:18:20 +0200
Candid Comment
The Zimbabwe Independent
Business gave a hostage to fortune
by Joram Nyathi
IT was the same in business, the media and the opposition. The response to
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' 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?"
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 this 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. 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.
.
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