US$ pricing will stiffle demand, causing job losses: Top economist
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BUSINESS and economics experts have condemned pricing in foreign currency, warning that the development will reduce product demand and forcing companies to operate below capacity which will ultimately trigger job cuts.
The comments come at a time some retail outlets and manufacturers like Simbisa Holdings have come out in the open gazetting United States dollar or black-market equivalent prices for customers using bond notes and RTGS.
Economist John Robertson said that while it is inevitable, the move will not boost business growth.
“While the manufacturers have no choice, the reality of the matter is that not many people will be able to afford the products because the country’s citizens are not earning foreign currency,” he said.
“So, in the long-term people will not be able to sustain the usual demand and this will translate to reduced production and job losses because pricing in foreign currency is a barrier to many people.”
Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe acknowledged that industry was now resorting to this pricing strategy as the last option to remain in business but warned that demand would be affected.
“Unfortunately, forex pricing is inevitable given the prevailing circumstances where government has not been able to avail enough foreign currency,” he said.
“Hence while this is the last solution for businesses to remain viable demand for products is going to reduce immensely and still present the challenge where most companies will continue to operate below capacity.”
Zimbabwe Congress of Trade Unions secretary general Japhet Moyo laid the blame on Finance Minister Mthuli Ncube’s “poor management practices”, adding that the October 2018 Monetary Policy announcement catalyzed the problems facing the country.
“Minister Mthuli Ncube seems to have lost it,” said Moyo.
“The market is uncontrollable, and it is causing havoc to the country’s workers who are living far below the Poverty Datum Line. As a result, we are likely to see more suffering if government does not deal with the fundamentals.”
The trade unionist said the country could not continue to follow the middle line and urged government to either fully dollarise or join the Rand monetary union.
“Shops in Tsholotsho no longer accept bonds and what happens with civil servants working in this part of the country?
“Certain medical procedures by doctors are now being charged in forex, and where would people get this since their wages and salaries are in RTGs?” queried Moyo.
However, Zimbabwe National Chamber of Commerce chief executive Chris Mugaga said the move towards foreign currency pricing indicate a situation whereby the economy is self-correcting.
“We have a currency problem which, for long, has not been resolved by government, and now the economy is moving towards adopting a currency which is usable,” he said.
“The fact that the surrogate currencies have led to serious problems which have seen the prices of foreign currency on the black market becoming unsustainable leaving the only option of pricing in forex.”