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Zimbabwe Price Hikes Continue Despite Government Efforts to Curb - 2003-10-09

Gas stations in Zimbabwe are ignoring the government's new fuel prices, and are setting prices of their own, usually much higher.

The government, in an attempt to protect low-income consumers, has set prices for products and services ranging from bread, sugar and flour to fuel and bus fare. But its price controls have backfired, leading to widespread shortages and withdrawal of services.

Gas prices have been raised twice since August, in an attempt to bring them up to what Minister of Energy Amos Midzi calls market-related prices. The government also gave up its monopoly on fuel imports.

The price hikes have made gas and diesel fuel widely available, but virtually all the oil companies are charging more than the government-set price.

Despite the threat of prosecution, bakers charge as much as four times the government price for a loaf of bread. To avoid government price controls, they make products that are not on the price list, creating shortages of bread.

Commuter van drivers simply stayed at home, after police cracked down on them for overcharging. This has made commuting a nightmare for some workers who spend as much as six hours getting to and from work.

University of Zimbabwe economist Moses Tekere says setting prices is the wrong way to protect consumers and eliminate shortages.

"The Zimbabwean crisis has its roots in various fundamentals that have been mismanaged," he said. "The answer really lies in us correcting the fundamentals, in us going back to producing goods that can be exportable, in us stimulating investments, stimulating economic activity, [and] putting up policies that enable people to produce goods and services in abundance. That is the only recipe for shortages."

Zimbabwe is experiencing its worst economic crisis since independence 23 years ago. Inflation is at a record high of 426 percent, and unemployment stands at more than 70 percent. Economists widely blame President Robert Mugabe's inept policies and sometimes-violent land reform program for wreaking havoc on the entire population.