Retailers have accused industrialists of withholding basic commodities to push the prices up as they row over a hike in prices, Business Times can report.
The economy is beset by foreign currency shortages and electricity outages which have pushed up the cost of production that companies pass on to consumers. Prices of basic commodities have tripled over the months as the deteriorating local currency and the cost energy alternatives are factored onto the final price.
Retailers, however, blame industrialists for a spike in the price of basic commodities with the Confederation of Zimbabwe Retailers (CZR) executive briefing President Emmerson Mnangagwa on the recent increase in prices on the local market and issues that require urgent attention.
The CZR told Mnangagwa that the continued existence of monopolies on the supply side of basic commodities has made it difficult to address the pricing challenges currently in the market.
On basic commodities whose prices are monitored by government Business Times is informed that a certain section of suppliers is withholding products to create shortages.
This, according to insiders, has been prevalent in the supply of products like sugar, cooking oil and bread where shortages have been experienced in established formal retail outlets with the products flooding the parallel market.
The CZR president Denford Mutashu confirmed to Business Times that they told President Mnangagwa that most suppliers had been involved in rent seeking behaviour of creating fake shortages on the market to push up prices.
“We met the President to inform him about what is happening with regards to pricing in the market,” Mutashu said. “We told him that the supply situation of basic commodities in the market is not pleasing at the moment as we are heading towards the festive season.
“It is quite disturbing that selected suppliers are withholding products and this has been done mainly on products whose prices are negotiated with the government.
There are certain products like sugar, bread and cooking oil whose pricing is negotiated with government. Therefore as you have observed, whenever there is a shortage of the product, when the product resurfaces, the price is usually higher.
“The issue of monopolies on the supply side needs to be addressed. As you are aware, there are not many players on the supply side as compared to the retail side, and the manipulation of supply has been rampant.”
Henry Ruzvidzo, the president of the Confederation of Zimbabwe Industries (CZI) said it was unfortunate that such representations to President Mnangagwa were made in the absence of other critical sectors.
He said industry had in the past been accused of creating artificial shortages which was proved wrong.
“Such allegations have been levelled against manufactures in the past but it has since been established that it is other players within the supply chain that have been manipulating the flow of goods,” Ruzvidzo said.
“Those players are the ones who are withholding products in anticipation of a change in the exchange rate. There is absolutely no point for industry to be a player in this game of withholding products, otherwise they are the ones bound to suffer at the end.”
Industry is buffeted by low capacity utilisation which is expected to decelerate to 34% this year, from 48.2% in 2018 weighed down by foreign currency shortages, antiquated machinery, breakdowns, and the shortage of raw materials.
Business Times reported last month that some foreign suppliers are threatening to take over local firms after the firms failed to pay for raw materials delivered.