Friday, July 27, 2007

Zimbabwe Update: Politburo Backs Price Controls; Ideological Basis, etc.

Zanu-PF Politburo backs price controls

Herald Reporter

THE Zanu-PF Politburo met in the capital and threw its weight on the current efforts by the Price Monitoring and Stabilisation Taskforce’s to instill economic discipline in the country.

The ruling party’s supreme decision making body chaired by President Mugabe held its monthly meeting yesterday at Zanu-PF headquarters.

In an interview yesterday, Zanu-PF secretary for information and publicity, Cde Nathan Shamuyarira said the current crackdown on business to reduce prices took centre stage in the Politburo as it received an update on the operations.

"Yes, we held our Politburo meeting today (Thursday) which was very successful and the issue of prices was discussed at length.

"We received an update from the Price Monitoring and Stabilisation Taskforce and various members debated the report.

"The Politburo said the taskforce should continue with their work and they gave their suggestions during the discussion," said Cde Shamuyarira.

"We also discussed the party’s restructuring and once we report to the Central Committee, we will make the necessary announcement.

"The Politburo is a standing committee for the Central Committee, that is where we report to and once we do that we will issue a statement."

Cde Shamuyarira said the Politburo meeting also assessed the results of the crackdown embarked upon by the Government aimed at reducing prices of goods and services to pre-June 18 level.

Government has directed that prices of goods and services be reduced to the level that prevailed as at June 18 2007, a development has been well received by the country’s populace.

President Mugabe has since said the reduction of prices should also be extended to school fees, a development that is expected to mitigate the plight of many parents.

Most businesses have since complied with the directive.

‘Assist Government thwart economic saboteurs’

Herald Reporter

SECURITY forces should remain resolute in assisting the Government to thwart economic saboteurs who intended to effect regime change through prices meant to fleece ordinary citizens, the Speaker of the House of Assembly, Cde John Nkomo, said yesterday.

Cde Nkomo said Government’s price blitz was legal because it was done in line with the recently enacted National Incomes and Pricing Commission Act.

Speaking at a pass-out parade of 295 new police recruits at Morris Depot in Harare yesterday, Cde Nkomo applauded the police for helping Government restore order in the economy where relentless price increases were now a daily occurrence.

Cde Nkomo said the increases, which he described as unreasonable, were an act of desperation by Western imperialist forces through the MDC and other saboteurs to effect regime change in Zimbabwe.

It was disheartening that some manufacturers and retailers had become unethical by raising prices at alarming proportions.

"In view of this, I would like to commend our security forces and other stakeholders who through Operation Reduce Prices/Dzikisai Mitengo/Yehlisani Intengo have responded swiftly to Government’s call to circumvent this Western-sponsored ploy to sabotage the economy," he said.

Cde Nkomo urged the police to stamp their authority until the price increase scourge was tamed.

"It defies logic that the price hikes come hardly a month after Government, labour and the business signed the Social Contract, which compelled the three parties to come to a consensus on matters that affected the generality of our people.

"The unreasonable hiking of prices goes to show the desperation of Western imperialist forces through their proxies, the opposition MDC and other dreamers in the business sector, entertaining the hopes for regime change in Zimbabwe.

"Notwithstanding the evil and punitive economic sanctions that were unjustifiably imposed on our country by some Western countries, the Government will continue to open up opportunities for the black majority through empowerment programmes such as the land reforms, Operation Maguta and the recently launched Farm Mechanisation Programme which has seen resettled farmers benefiting from agricultural equipment and machinery provided by the Government," he said.

The recruits underwent six months training at Morris Depot.

They covered subjects such as the political history of Zimbabwe, statute law, police duties and investigations, human rights and policing, first aid and public order management and weapons handling.

Zinwa must deliver: Gono

Municipal Reporter

THE Reserve Bank of Zimbabwe will not stand by and watch as service delivery deteriorates in local authorities and other sectors, Governor Dr Gideon Gono said yesterday.

He criticised the Zimbabwe National Water Authority for agreeing to the wholesale takeover of water and sewer responsibilities when it was obvious it did not have the capacity to deliver.

Departing from his prepared speech at the Zimbabwe Local Government conference in Harare yesterday, Dr Gono said it was disheartening that some sections of a city or a school go for up to 10 days without water.

Without specifically mentioning Zinwa but apparently referring to it, Dr Gono said the water authority should at least have enumerated the tasks it was able to take at a time.

When reporting to Cabinet, Government officials should say what they were able to do rather than inflate the tasks they thought they could do.

"Kumhanya handiko kusvika. Sorry, if I go against the grain. My role is to advice," he said.

"Where we are failing we must go back to Cabinet for reviews of decisions. There is nothing wrong in reviewing certain decisions," Dr Gono said.

He said it was also sad that Zinwa and local authorities were engaged in prolonged debates over water management when such energies could be better channelled to resolving the urgent water requirement gaps in some council catchment areas.

Dr Gono said the central bank would not watch as service delivery deteriorated in local authorities or any other sector of the economy.

"We will not abandon projects we started. This is regardless of whether the minister or ministry wants it or not. Developing Zimbabwe is not the preserve of individuals. We only intervene when we see that those who are supposed do it are not doing it.

"We will not allow the collapse of the economy just because we are fighting for job descriptions. Kana zvichida minamato tinoita minamato yacho kuti tishande pamwe chete," he said.

He made the comments in response to charges that he was fuelling inflation through the central bank’s quasi-fiscal activities.

"We sought to be practical. But that was not yet in the minds of some," he said.

Dr Gono said he would make representations to the Cabinet Taskforce on Price Stabilisation to allow for the reopening of council abattoirs.

He said waiting for the Cold Storage Company to deliver meat on its own would not work.

"If we wait for CSC on its own . . . CSC has no capacity. The truth has to be told. You became unintentional victims. Personally, I will make representations to the taskforce. You cannot be regarded as the private sector," he said.

Dr Gono also urged councils to earn their own foreign currency through engaging in export-oriented projects such as horticulture and ranching.

"Try and earn your own forex. We will not give you. You have the land to grow flowers and rear cattle. No one is going to generate foreign currency for you," he said.

He promised that the central bank would assist the local authorities to have motorised road maintenance equipment but urged the councils to enter into partnerships to purchase the equipment.

Dr Gono said councils should prioritise housing delivery programmes to reduce the high cost of rentals.

Meanwhile, Zinwa says the water supply disruptions being experienced in the western suburbs in Harare are as a result of pumping problems being faced at the major water treatment works.

In a Press statement yesterday, Zinwa assured residents of the affected areas that pumping would resume today, but warned of disruptions in other parts of Harare Metropolitan Province due to power supply problems and a major leak at Morton Jaffray Water treatment works.

"As a contingency measure, Zinwa would like to urge residents of areas that are currently not receiving water supplies to go and access free water from emergency water supply points that were installed in their areas by the authority last month," Zinwa said.

These included Budiriro 1 Primary School and a stand pipe opposite house number 170-36th Street in Budiriro 1.

"Zinwa would like to take this opportunity to warn residents of other parts of Harare Metropolitan Province of possible water supply disruptions in their areas due to power supply problems being experienced at Morton Jaffray Water treatment works and Warren Control Booster Pump Station and reduced water supplies from Morton Jaffray to Warren Control because of a major leak that is being attended to just outside the Morton Jaffray Treatment Works.

"Any inconveniences caused is sincerely regretted."

Ideological basis for price controls

By Godwills Masimirembwa

DICTIONARIES generally define ideology as "a set of beliefs, concepts and principles forming the basis of an economic or political theory". This week, this writer continues with his analysis of Zimbabwe’s price control legislation with particular emphasis on how it dovetails with international "beliefs, concepts and principles" justifying price controls.

In an article titled "Price Controls: now is the hour" published in The Herald (July 6 2007), this writer submitted that "the state is free to correct the exploitative and abusive practices of unconscionable businesspersons, landlords and estate agents . . . who hike prices of goods and services and rentals without regard for the public interest".

There is no doubt that the prices of goods and services positively or negatively impinge on people’s standards of living. Low prices generally lead to a better standard of living as consumers can afford to purchase goods and access services. High prices generally lead to low standards of living, as consumers cannot afford to purchase goods and access services.

The recent price reductions have witnessed a surge in the demand for goods as the majority of consumers can now afford to buy food, clothes and medicines, etc. The majority of tenants can now afford to pay rentals, either for commercial or residential buildings.

The Universal Declaration of Human Rights adopted and proclaimed by the United Nations General Assembly on December 10 1948 recognised and protected the economic rights of every member of society. The "beliefs, concepts and principles" of member states of the United Nations include the right of everyone to a decent standard of living.

Article 22 of the Universal Declaration of Human Rights reads: "Everyone, as a member of society, has the right to social security and is entitled to realisation, through national effort and international co-operation and in accordance with the organisation and resources of each state, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality."

Economic rights are thus recognised as being "indispensable" for the "dignity and development" of a human being. The economic rights being referred to are set out in Article 25 (1) which partly reads: "Everyone has the right to a standard of living adequate for the health and well-being of himself and his family, including food, clothing, housing and medical care and necessary social services . . ."

On December 16, 1966 the United Nations General Assembly adopted and opened for signature by member states the International Covenant on Economic, Social and Cultural Rights.

This covenant recognises and cements the ideological position that economic rights are an inalienable human right obligating the state to promote and protect the same. Part of the preamble to the covenant reads:

"Recognising that, in accordance with the Universal Declaration of Human Rights, the ideal of the free human beings enjoying freedom from fear and want can only be achieved if conditions are created whereby everyone may enjoy his economic rights, realising that the individual, having duties to other individuals and to the community to which he belongs, is under a responsibility to strive for the promotion and observance to the rights recognised in the present Covenant, agree upon the following articles."

Article 11 (1) of the Covenant then provides for the protection of the economic rights of citizens in the following terms: "The State Parties to the present Covenant recognise the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions. The State Parties will take appropriate steps to ensure the realisation of this right, recognising to this effect the essential importance of international co-operation based on free consent."

The Covenant, no doubt, places an obligation on individuals owning businesses and/or companies "to strive for the promotion and observance" of the economic rights recognised in the Covenant.

The Covenant no doubt recognises that business on its own may not freely "strive for the promotion and observance of the economic rights recognised in the Covenant". It therefore places the ultimate responsibility to ensure compliance on the State Parties or the government.

Profiteering is anathema to promoting and protecting the economic rights of citizens as contemplated under the Universal Declaration of Human Rights and the International Covenant on Economic, Social and Cultural Rights.

But profiteering is a reality that society faces from greedy and unscrupulous businesspersons. Member countries of the United Nations and State Parties to the International Covenant on Economic, Social and Cultural Rights are therefore entitled to enact laws that promote and protect the economic rights of their citizens, while at the same time protecting the business community’s right to make a decent profit.

This writer submits that the current price controls have to be viewed from the context of the Zimbabwean Government’s responsibility to protect consumers from the rampant profiteering of greedy and unscrupulous businesspersons, while safeguarding the reasonable profit margins of business.

It follows, therefore, that in the absence of greed and profiteering, in the presence of ethical business practices with respect to profit margins, price control laws would not be invoked and implemented, as is the case now.

The Control of Goods Act (Chapter 14.05) and the National Incomes and Pricing Commission Act (Chapter 14.32) complement each other in protecting consumers from the excesses of business in pricing goods and services. The provisions of these two pieces of legislation are consistent with the provisions pertaining to economic rights of citizens as set out in the Universal Declaration of Human Rights and the International Covenant on Economic, Social and Cultural Rights.

As already stated, the core purpose of economic rights is to promote and protect "an adequate standard of living" for citizens. The mandate of the National Incomes and Pricing Commission is to achieve exactly what the United Nations defines as the economic rights of a citizen.

Section 5 of the National Incomes and Pricing Commission Act reads:

Functions of Commission;

The functions of the Commission shall be to:

a) Undertake research and maintain a comprehensive nationwide statistical database to be used in the analysis of pricing and production costs across all sectors of the economy and developing periodic pricing models, frameworks and strategies;

b) Monitor price trends of goods and services through comprehensive surveys and inspections, producing periodic price monitoring reports and initiating corrective measures in cases of unscrupulous business practices affecting Zimbabwe’s pricing system;

c) Consider, approve or determine, as the case may be-

i. Requests for price adjustments of price monitored or controlled goods and services and the impact thereof on the economy of such adjustments;

ii. The major cost drivers in various industrial sectors;

iii. Prices and industry mark-ups and trade margins in relation to price monitored or controlled goods and services;

d) Investigate pricing violations;

e) Provide regular reviews and updates on capacity utilisation in various sectors of the economy, promote public understanding and disseminate information on matters related to prices and wages, compile regular reports, on the status of incomes and conduct stakeholder training, education and awareness campaigns on pricing and incomes issues;

f) Establish the determinants of wages and wage variations in all sectors of the economy and provide information on minimum wages for the purposes of wage and salary negotiations, carry out productivity studies and track productivity trends in the economy and assess the impact of remuneration packages on the prices of goods.

g) Section 3 of the Control of Goods Act, as amended by Section 28 (b) of the National Incomes and Pricing Commission Act then empowers the President, acting on the recommendation of or in consultation with the Commission, to, among other things, control the prices of goods.

Article 11 (2) of the International Covenant on Economic, Social and Cultural Rights obligates State Parties to take measures that improve methods of production and ensure an equitable distribution of food supplies in furtherance of the economic rights of citizens. It reads:

a) To improve methods of production, conservation and distribution of food by making full use of technical and scientific knowledge, by disseminating knowledge of the principles of nutrition and by developing or reforming agrarian systems in such a way as to achieve the most efficient development and utilisation of natural resources;

b) Taking into account the problems of both food-importing and food-exporting countries, to ensure an equitable distribution of world food supplies in relation to need.

The National Incomes and Pricing Commission provides precisely for what Article 11 (2) of the International Covenant of Economic, Social and Cultural Rights advocates, for under Section 5 (e) the Commission is enjoined to "provide regular reviews and updates on capacity utilisation in various sectors of the economy, while under Section 5 (f) it is enjoined to carry out productivity studies and track productivity trends in the economy . . ."

The Control of Goods Act, under Section 3 (b), empowers the President, acting on the recommendation or in consultation with the Commission, to control the distribution, disposal, purchase and sale of goods, while Section 4 of the same Act provides for the rationing of goods to achieve equity.

The ideological justification for price controls in Zimbabwe or in any other country for that matter, can therefore be summarised as follows:

a) Zimbabweans are entitled to enjoy the economic rights that are internationally accepted and stipulated in the Universal Declaration of Human Rights and the International Covenant on Economic, Social and Cultural Rights;

b) Government has the responsibility to enact laws that protect the economic rights of Zimbabweans;

c) Business has an obligation to self-regulate and operate businesses ethically, earning reasonable profits but shunning profiteering and other vices associated with unscrupulous business practices;

d) In the absence of self-regulation by business, the presence of rampant profiteering and other business vices, the Government has an obligation to Zimbabweans to invoke and enforce consumer protection laws that were, but for the deviant behaviour of business, lying possum.

e) Government’s determination to root out the importation of inflation into Zimbabwe by forex barons and companies intercepting foreign currency meant for the formal sector, which then surfaces in the country in the form of overpriced goods like fuel, motor vehicles and other trinkets is borne out of its commitment to protect the economic rights of Zimbabweans.

Government’s determination to ensure that consumers pay reasonable rents, parents pay reasonable school fees, patients afford medical fees, prices of houses are within the reach of many is equally borne out of Government’s commitment to protect the economic rights of Zimbabweans.

Government’s determination to root out any form of profiteering by the business sector is consistent with the obligation to protect the public interest.

The crippling effects of the hyperinflationary environment Zimbabwe finds itself in can only be reversed through laws and policies that curtail and bring sanity to the unbridled capitalist economic forces of individual or corporate aggrandisement.

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