Forced price cuts drive down production
A government operation forcing businesses to reduce prices by 50% will drive manufacturing under, push unemployment up and bolster the informal market as basic commodities become scarcer, analysts have warned.
Harare - A new task force, set up to monitor and enforce compliance, ordered manufacturers, wholesalers, retailers and other service providers to reduce their prices to 18 June levels; but a simultaneous salary increase for civil servants, which topped 600 percent, sent the prices of basic commodities, clothing and transport fares shooting up.
Reacting to the spike in prices of commodities, President Robert Mugabe recently accused commerce of trying to foment discontent ahead of next year's presidential and parliamentary elections.
Over the past two weeks, teams comprising the police, ruling ZANU-PF militias and other government employees have been raiding factories, wholesalers and shops and forcing them to sell at reduced prices.
The crackdown, codenamed "Operation Reduce Prices", has led to the arrest of 33 company executives and resulted in basic commodities disappearing from shelves, amid threats that those who failed to comply with the order would have their businesses nationalised.
"At the moment there is hardly any production taking place, and there is a real possibility that manufacturing will grind to a halt and, naturally, more people will be thrown into the streets, and that means higher levels of poverty," Innocent Makwiramiti, a businessman and former chief executive officer of the Zimbabwe National Chamber of Commerce (ZNCC), told IRIN.
