Businesses in Zimbabwe Are Forced to Cut Prices in Half – Mugabe’s “Plan” for Skyrocketing Inflation Backfires

by Constance Manika
– Zimbabwe –

Most of us here in Zimbabwe thought he was joking when we first heard President Robert Mugabe tell the public that his government was going to “pounce on greedy businesspeople” because they were increasing the prices of goods by the day to deliberately fuel inflation.

Mugabe went on his usual tirade about conspiracies plotting against him, accusing retail businesses of working with the opposition Movement for Democratic Change (MDC) party and Western governments to “topple” him. He said increasing prices were just a calculated effort to drive the hungry people of Zimbabwe into the streets in revolt.

On that day in June, Mugabe was speaking on national television at a state function. We all knew his anger and fury had been caused by the then US ambassador to Zimbabwe, Christopher Dell.
In an interview with Britain’s Guardian Newspaper, Dell had predicted that Zimbabwe’s inflation would reach 1.5 million percent by the end of 2007 and that Mugabe’s government was “likely to inflict regime change against itself through mismanaging the economy.”

Dell also predicted that hunger would lead the people of Zimbabwe to forcibly remove Mugabe from power. He was quoted as saying:

“Things have reached a critical point. I believe the excitement will come in a matter of months, if not weeks. The Mugabe government is reaching end game, it is running out of options. By carrying out disastrous economic policies, the Mugabe government is committing regime change upon itself.”

These comments infuriated and unsettled Mugabe, who went on the defensive as usual attacking Dell, the opposition and businesses – accusing them all of trying to pit the people of Zimbabwe against him.

As I said at the beginning of this article, many of us thought this was the usual “conspiracy theory” talk we’ve heard so often before. We thought that it was just another passing storm, but we were in for a big surprise. A few days later we learned that Mugabe had deployed his notorious “hit squad” in various parts of the country in the name of the Cabinet Taskforce on Price Monitoring and Stabilization, forcing businesses to reduce their prices by at least half!

When the rumors began many of us were still in denial. Personally, I thought to myself, ‘this is just impossible’ – not to mention illegal – even Mugabe would not propose to rule in such a blatantly high-handed manner. I was convinced private businesses would put up a fight in the courts and the government would lose, but I guess this was just wishful thinking, no matter how civilized and educated an approach that might have been. Most of Mugabe’s “taskforce” are brainwashed youth trained at the National Youth Service Training camps. None of them stopped to consider what they were: they were simply following orders.

The “taskforce” went into full effect, operating on a massive scale; they visited retail clothing shops, department stores and supermarkets, ordering that prices be cut. And because this exercise was very labor intensive, big supermarkets and department shops were forced to close their doors to spend at least two days reluctantly changing their prices.

There was chaos everywhere as Mugabe’s supporters followed the rush of the “taskforce” everywhere they went, taking advantage of the ridiculously low prices to hoard if not loot food and clothing. In a matter of weeks most shops were empty and businesses who had sold their stock suffered such great losses they could not afford to restock their shelves.

But then there were new threats from Mugabe’s “taskforce” for those with empty shelves. Businesses were warned that if they failed to restock their supplies, they would be identified as trying to sabotage the government and would be arrested. Members of the public were even furnished with a Toll Free number to report retail shops that overcharged or “hid” basic commodities in storerooms, to deliberately leave supermarket shelves empty.

As the shops got emptier and emptier by the day, we heard reports that business managers were being arrested, convicted and sentenced for either overcharging or failing to restock! It finally dawned on many of us that this was not a joke at all.

Since all this began, I have gradually become completely convinced that Zimbabweans are dealing with a deranged leader who no longer cares about anything but his own interests. He intends to cling to power at all costs, regardless of the effects his policies may have on the future of the country.

I am afraid that Mugabe’s evil and sick mind can so twist facts that he has actually deluded himself into believing that forced price controls would be a means to slow down inflation (or at least prevent it from reaching the levels predicted by Dell) and that if he could ensure that Zimbabweans could continue to afford basic commodities for survival, then they might not revolt against him.

What Mugabe seems to have disregarded is that when businesses have to struggle so hard just to survive, many retail workers will lose their jobs in the long run. Apparently such things do not concern him; his focus is solely on staying in power whatever the cost, even at the expense of his own life.

Since the implementation of price controls in late June at least 7,500 executives and other businessmen have been arrested, briefly jailed and fined for overcharging.

The Confederation of Zimbabwe Industries estimates that since the price blitz began, businesses have lost over $40 trillion ZWD while the government itself has lost $13.1 trillion ZWD in revenue from Value Added and sales taxes.
Clothing retail giant Edgars is facing economic crisis: as a result of the price blitz, it is closing 19 of its 55 branches; 220 employees are set to lose their jobs.

Edgars is also preparing to close 14 of its Express shops (smaller and cheaper versions of its larger stores) in towns and cities such as Harare, Bulawayo, Marondera, Rusape, Chitungwiza and Bindura. Hundreds more workers will soon find themselves out of a job.

The clothing retailer was quoted recently in a local business weekly saying that the “company has found itself in a precarious position where it was restocking at much higher prices only to be forced to sell at low prices in line with government’s June 18 directive” and was therefore downsizing.

A local weekly newspaper quoted Edgars saying in its 2007 Interim results:

“In June, the Minister of Industry and International Trade announced new measures to monitor and control the price of all goods and services in the country.

“All this was done through the press making it impossible to guess what precise business action was required. It was only on July 6th, after several arrests, that Statutory Instrument 142 of 2007 (SI 142) was published in the Government Gazette.”

Having already conveyed to the government the “negative effects” that they have experienced as a result of SI 142, Edgars executives now say they will be sure to let Mugabe and his government know that they have single-handedly killed the future of retail business in Zimbabwe.

And Edgars is not the only company facing bankruptcy.

Department stores such as Greatermanns, Miekles and Barbours are eliminating their in-store credit programs next month due to consistent revenue losses. Other clothing retail shops such as Topics, Truworths, Queenspark and Clicks have already stopped offering credit to their customers.

And now, making matters even worse, Mugabe has slapped a six-month freeze on wages, rents and service fees, arguing that he is fighting hyperinflation! Yet the salaries that most people earn are already well below the Poverty Datum Line. Strikes have become commonplace as workers continue to push their employers for better wages in a crumbling economy where any pay increase is quickly eroded by inflation.

Since the new school term began at the beginning of September, teachers have been on a strike. They say they will not go back until the government pays them better salaries but with the wage freeze, it is highly unlikely that their protests will get very far. So while these teachers strike, children will continue to be deprived of an education, all because of Mugabe’s ridiculous economic policies.

As Mugabe desperately clutches at straws to arrest inflation, it is clear that he is determined to prevent Christopher Dell’s predictions from coming true. From retail to the public sector, everyone is suffering at the hands of a man too blind to recognize that he is destroying the country’s economic infrastructure.

If Dell’s comments did indeed scare Mugabe to this extent, then we definitely want him back! Perhaps now this despotic leader of ours will actually step down and put an end to the suffering he has caused the people of Zimbabwe.

Currently the official inflation rate stands at more than 7,000 percent according to the government-controlled Central Statistics Office, but independent economists estimate that it is actually hovering around 100,000 percent!

So maybe Dell was right; had it not been for the price controls, maybe inflation would have reached his staggering predicted figures by now.

In Zimbabwe, the struggle continues. Who knows when or how it will end.

About the Author

Constance Manika is a journalist who works for the independent press in Zimbabwe. She writes under this pseudonym to escape prosecution from a government whose onslaught and level of intolerance to journalists in the independent press is well documented.

In Meltdown in Zimbabwe, an exclusive and ongoing series at The WIP, Constance provides continued on-the-ground reporting from her embattled country where Zimbabweans struggle daily for democracy, economic sustainability and human rights.