PHILLIMON MHLANGA
Government is engaging State-entities over sharp increases in tariffs for public utilities, Finance permanent secretary George Guvamatanga has said, amid concerns the entities were now front running the market.
The government-owned companies and local authorities have been increasing the public utilities, causing something which analysts described as “government inflation”.
“We are engaging parastatals and councils. We are saying don’t front run the market,” Guvamatanga said.
He said the increases have serious repercussions on market stability, the recovery of the productive sectors of the economy such as mining, manufacturing, agriculture and tourism, which the government wants to drive the country’s economic recovery.
Consequently, prices of public utility tariffs have spiked at a time the economy is reeling from the effects of Covid-19 pandemic.
This undermines business confidence.
Recently, the Zimbabwe National Road Administration (ZINARA) hiked toll gate fees in foreign currency by more than 40% following the gazetting of Statutory Instrument 32 of 2021. ZINARA justified the increases saying it was part of efforts to improve the country’s road network.
Several city councils including Harare, Chitungwiza, Bulawayo, Gweru and Mutare, have also hiked property rates, water charges, sewer charges and clinic consultation fees.
Residents of Mutare city and Gweru, as recently reported by Business Times, resisted the implementation of a 300% tariff increase. They described the move as unjustifiable.
“Residents and ratepayers are financially crippled and for the City Council to continue milking them when they have objected last year’s budget is unbelievable.
“We view this move as undemocratic and it is evident that City Council is going to face a huge resistance from residents who are already struggling to make ends meet.
“Section (288)(2) (a) of the Urban Councils Act 29:15 stipulates that when the estimates presented in terms of subsection (1) the council shall ensure that copies of the estimates are forthwith made available for inspection by the public,” a statement by the United Mutare Residents and Ratepayers Trust reads.
Power utility, ZESA also increased its tariffs recently. Government, through the Zimbabwe Energy Regulatory Authority, recently increased power tariffs for ZESA, which also has a negative impact of pushing up prices of goods.
Several analysts described the rocketing prices of public utilities as ‘government inflation’.
“The increase in tollgate, utilities by the government owned companies have resulted in general price increases by the private sector as the private sector tries to match the increase in prices to match cost,” University of Zimbabwe lecturer, Nyasha Kaseke said.
He added: “This has resulted in an increase in exchange rate as the black-market players match the increase in price.
Therefore, the recent increase in prices may be referred to as government induced inflation.”
