HARARE - Zimbabwe’s President Robert Mugabe is lashing out against businesses that he believes are defying his orders to reverse price hikes for basic commodities.
Mugabe is accusing those who defy his order of being "saboteurs" against his government, some of whom he said were from within his own ruling Zanu PF party. He promised to take corrective measures but some analysts are calling for the government to stabilize the economy, rather than blame businesses.
The past two weeks have seen a wave of panic buying as Zimbabweans react to reports on social media that shortages similar to those of 2008 are returning. The reports of price hikes prompted a strong response from Mugabe on his return this week from the U.N. General Assembly.
“These are the issues that we do not understand, but we have the knowledge that there are saboteurs who would want things to go wrong so that people can revolt against the government in our absence. Anyway, I am back and I will look at [it]. I do not think these are shortages that can fail to be addressed in one day or two. Those shortages, we will examine them and find a solution," Mugabe said.
More than two days have passed and the price hikes are worsening, prompting sharp criticism from former finance minister and opposition leader Tendai Biti. He said structural economic reforms are what is needed.
“[Mugabe] suffers from a reality distorted field. There is a structural crisis in the economy. We are not producing foreign currency, therefore [for] the little foreign currency the prices has shot up. The exchange rate between the bond note and the U.S. dollar I think it is 40 percent. The cost of money has shot up. So these retailers must increase their prices. These retailers particularly the fuel ones must refuse RTGS [Real Time Gross Settlement] and bond note payments as they are doing, because when they import from Dubai, Kuwait, they cannot [pay], they need foreign currency. So chickens have come home to roost, as I keep on saying, you can rig an election, but you cannot rig an economy,” Biti said.
Four-tier price system
Last year Zimbabwe introduced “bondnotes” - surrogate currency that officially trades at on par with the U.S. dollar. But lately, businesses have been asking for more if customers pay with them. There is another price for paying using bank cards and another one when a customer makes a bank transfer.
Wednesday, Finance Minister Patrick Chinamasa said the four-tier price system and price hikes would end soon, warning that authorities will arrest those who overcharge.
But economist Prosper Chitambara, of the Labor and Economic Development Research Institute of Zimbabwe, thinks other measures are necessary.
“Definitely we are in a crisis of confidence. A number of companies are having to go to the black market or parallel market to source for foreign currency to buy critical inputs from outside the country. For me, the bond notes were never a solution. They were just probably a stop gap measure, but they have actually created more problems now, this parallel market I think is really the cause of the recent hike in prices that we have actually seen. The best solution is to involve everyone, to bring everyone on board. This idea of making threats or threatening to re-introduce price controls will actually not work,” Chitambara said.
While fuel shortages have somewhat eased since the beginning of the week, cash shortages and price hikes have not shown any sign of waning.
The hikes prompted prominent pastor Evan Mawarire to call on Zimbabweans to protest, before he was arrested and accused of subversion. Zimbabwe's magistrates court had the charges dropped and he was released Tuesday.
But Zimbabwe’s economic problems seem to be far from easing.