Prosper Ndlovu Business Editor
THE country’s pricing model should be reviewed downwards to increase domestic industrial competitiveness following revelations local commodities were costlier compared to other countries in the region, analysts have said. On Monday, the Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya, lamented the increased imports flooding the country, which he said were suffocating local firms.

While noting the increased cost of production, the RBZ boss, in his mid-term monetary policy statement, said the country was losing business to cheap imports fuelled by high local prices and interests rates.

“The prices of goods and services that are being charged in Zimbabwe continue to be higher than those charged within the region and international markets,” said Dr Mangudya.

“Imports have taken over the domestic market as they attract lower prices, while exports have lacked the competitiveness required to capture new and previously lost markets.”

He said reduction in prices was an unavoidable price correction and self-adjustment process for companies and individuals to remain in business in a tight liquidity economy.

“The high domestic prices also contribute to the incidence of high propensity to import within the economy. Attempts to regain lost export and domestic markets have remained constrained by lack of competitiveness, largely emanating from high production costs.”

Bulawayo-based economic analyst and Ball Joints manager Ephraim Makara said reviewing the pricing model could increase domestic consumption and shore up local firms’ performance.

“Prices are generally high in Zimbabwe. Local companies always want to make 100 percent profit leading to people opting for imports.
“The government should find a way of reviewing the pricing system and ensure our profit margins are reasonable,” he said.

Another analyst who requested anonymity suggested quick adoption of internal devaluation saying the model worked successfully as a reform strategy in Europe during the financial crisis in the fall of 2008.

Dr Mangudya said high charges reflect the country’s costly production models on the back of outdated and antiquated machinery compared to regional and international competitors who have adopted low cost, efficient and advanced technology.

He urged prioritised investment on the latest technology to regain the much-needed competitive edge in the domestic market and international export destinations to curb the haemorrhaging effects of imports.

Dr Mangudya said government should implement deliberate policies that attract foreign direct investment and exploit the liberalised exchange control policies on capital and dividends for the benefit of the economy.

Zimbabwe’s import bill clocked nearly $4 billion in the past two years according to the Zimbabwe National Statistics Agency (Zimstat), creating a trade deficit of $1,7 billion between January and June this year.

Analysts say the trend spells doom for the economy and urge the government to take urgent measures to stem the situation.

You Might Also Like

Comments