Morris Mpala, MoB Capital Ltd
THE biggest challenge right now is “are Zimbabwean goods, assets and liabilities priced accordingly”.

The answer is a strong NO. Pricing in Zimbabwe seems to take the “Bigger Fool Theory” to heart. This theory says for every price there is a taker, that is, any item will get bought regardless of the price as buyers believe there is another buyer who will pay an even higher price for the same item.

Let’s look at the prevailing pricing regime in our country. While the reversal of the 15 percent VAT levy on farming based products is highly commendable, the pricing structure remains the same in most shops. Irresponsible pricing is reflected in the five-tier regime. Consumers are now subjected to; cash price in United States dollars, cash price in bond notes, transfer price in RTGS, transfer price when swiping using Point of Sale machines (POS) and finally transfer price when using mobile money such as Telecash and others. Grocery prices are the worst affected due to cash and RTGS prices prevailing on the market. This is bad for the economy and it does not help businesses at all.

The argument that “I’m getting it at a good price” fosters people to buy at whatever price is on the market. The distortions have caused business to price goods and services in a relatively emotional manner that is affecting the general economy as a whole. This line of thinking causes stock market and fuels stock market and commodity market booms and manias, which “in due course lead to busts and paranoias,” according to business dictionary definition.

Individual pricing of goods and services as well as pricing of national assets in our country confuses the market and there is a need for serious alignment to bring this insanity to check. Pricing should be devoid of emotions but be a measure of value based on business fundamentals.

When prices become extortionist (high) or when they become slavish (low) the desired or intended economic results will be lost. Pricing has to be right otherwise nothing will make sense and if nothing makes sense chaos prevails, which leads to anarchy and a very dysfunctional economy. This forces the economy to move around in circles with no direction at all as it lacks fundamentals and growth becomes stunted.

The price madness in our country reduces businesses to opportunity seekers. For instance, why is a loaf of bread pegged at $1? Is that a fair price?

Relatively fizzy drinks retail at the same price. What are the implications when Chinese do it $1 for two loaves? Are consumers paying for inefficiencies and lack of economies of scale of industry/service providers?

These are double standards as pricing now becomes very subjective such that the one who can bully the market into accepting their price seems to win the war. It never follows any fundamentals. If you are sensational and you push your price and it’s acceptable, maybe due to desperation, often it becomes a benchmark price and gets replicated into the entire system through relative pricing. When this pricing is wrong (as is always the case) it distorts the whole pricing system.

Let’s look at mortgage payments. Are these fair prices of houses? Lending and deposit rates, do they resemble some form of normalcy at all? Tourism rates, do they resemble aspirations or emotions, maybe a multi-tier pricing system that also caters for locals.

There are so many questions to ask as to why airtime is pegged at $1, school fees at record high, mining renewal fees, The Chronicle at $1 but Fingaz/Independent at $2. Why Harare is cheaper than Bulawayo but all cheaper than Hwange and Victoria Falls? Are stands priced right, houses and rentals, who determine these anyway? The value of my passport, is it right with all its security features?

Compare civil servants salaries against the lowest paid and highest paid even in private sector? What of pensioners’ payouts and bank charges or insurance premiums. Issues of minerals pricing, cost of doing business/licences and so forth come in. Exported graduates come back to charge ridiculous prices for their service.

Agricultural products never fetch fair prices. Some of my friends from the US have claimed Zimbabweans have reduced the dollar to 40 cents. Whether it’s wanting to cream as much in terms of profits or sheer lack of knowledge coupled with lack of gradual patience in building empires or yester year profiteering mentality, one never knows.

The truth lies in between and fact still remains pricing is warped. Compare DStv prices local and regionally? Someone is killed over $1 gambling disagreement, what price to life is that?

I can go on and on. Tariffs, charges, are based on regional tariffs but service, product quality, salaries and benefits are not based on regional standards.

Who is fooling who? It’s because the initial pricing was totally wrong. It is just a sensational figure, which has a lot of inherent inefficiencies, which tends to correct itself with time and leaves someone with an over valued item.

Unfortunately, all these inaccuracies find themselves across other products and services and causes discord in the economy at large.

Aspire to Inspire Before You Expire.

Do unto others as you would want them to do unto you. At this rate we will all perish with irresponsible pricing dysentery.

IF YOU LIVE IN BYO PLEASE CONSERVE WATER
IF YOU LIVE IN ZIMBABWE PLEASE SWICTH OFF SWITCHES (SOS) AND USE ELECTRICITY SPARINGLY
IF YOU LIVE ON PLANET EARTH PLEASE PRESERVE THE ENVIRONMENT

Morris Mpala is the managing director of MoB capital Limited, a Bulawayo-headquartered micro-finance institution with footprint across the country.

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