THE reduction in prices of basic commodities being witnessed across the country is good news for all Zimbabweans and could go a long way in spurring economic growth and improving the capacity ulitisation of local firms as volumes increase. Coming at a time when disposable incomes are low with scores of people unemployed, this comes as a reprieve to consumers who will now enjoy better value for their hard earned money.
Zimbabweans have noted with hope, the steady commodity price reductions, which economic analysts say could persist, especially in light of the weakening of the South African rand. The introduction of bond coins by the Reserve bank now appears to have been a masterstroke as their stability due to their US$ value is increasing their acceptability within the market and lowering prices of locally produced goods.
Yesterday we reported that Delta Beverages, a leading beer and soft drink maker, had slashed prices of its mainstream beer products. The giant firm extended cheer to imbibers by cutting beer prices across the pint (375ml) and the quart (750ml) packs for mainstream brands — Castle and Lion Lager and Carling Black label.
The price of the popular pint and quart packs has been reduced from $0.90 to $0.80 and $1.55 to $1.50 respectively while all other brands and pack prices remain unchanged. “The new prices come into effect on Thursday, October 1, 2015, and have already been communicated to their valued customers,” Munyaradzi Nyandoro, Delta’s general manager explained.
“We’re delighted to announce this price change ensuring that we enhance beer affordability for our hard working consumers. It’s our sincere hope that our consumers will be happy with the early cheer ahead of the festive season.”
We also reported that several businesses have also cut prices of their goods in the past few months. A 500g of margarine now averages $1 from $2,50, a litre of Coke has dropped to $1 from $1,40, cooking oil now costs $2,75 from $3.50 while a 500ml bottle of maheu has been reduced to $0,40 from $60 with mineral water now selling for as low as $0,25 from $0,50.
A 2kg pack of rice $1,45 from $2,50, a 2kg of sugar averages $1,69 from $2 while a 10kg mealie- meal has also dropped to about $4,19 from about $6.
We applaud local companies for adopting a pro-active stance to ease the burden on consumers at the same time facilitating growth through volume sales and urge others to follow suit. The price of newspapers, bread and airtime remain high at $1 and the sooner it is reviewed the better for the economy. Over the years our businesses have been accused of profiteering by charging unrealistic prices.
The trend had been blamed for fuelling the influx of cheap imported products from neighbouring countries. This has worked against the viability of local firms who suffered reduced demand and ultimately heavy losses, forcing some to shut down.
We concur with economic experts that domestic price cuts will bring the desired balance in the demand and supply matrix. This will not only assist local firms to bridge the competitiveness gap vis-a-vis imports but will also increase their volumes. Competitiveness is a critical indicator of positive economic growth. The weakening of the rand against the dollar, a major currency in Zimbabwe, is proving to be an advantage to local businesses.
Confederation of Zimbabwe Industries (CZI) president and United Refineries chief executive officer, Busisa Moyo, said increasing competition among local firms is good for the economy. “Well the reason why the prices of commodities are going down, it’s because of the competitive landscape. Local producers are getting pressure from consumers and importers in pricing their goods,” said Moyo.
“The other thing is the volumes, industries have increased their production so prices will continue going down.” The fall of the rand, we believe, means that most local companies that procure their inputs from South Africa now do so at a lesser cost.
“Local industries procure most of their inputs from South Africa so they’re benefiting on the back of a stronger US$ currency. I think that’s one of the reasons why they have reduced prices because they no longer incur huge costs,” said Reginald Shoko, a Bulawayo-based analyst.
Companies such as Delta Beverages and Econet Wireless have adopted a bold stance in calling on their suppliers to slash prices. The firms also cut perks for their staff in keeping with the cost containment measures.
There are increased calls to also review labour, utilities, transport, technology and taxation costs, which have been blamed for increasing the cost of doing business in the country.