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Zimbabwe President Mnangagwa says cartels sabotaging economy

Christian Fernsby |
Zimbabwean President Emmerson Mnangagwa lamented the emergence of monopolies and cartels in the economy, blaming them for incessant price increases of basic goods and services.

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In his state of the nation address and speech to mark the opening of the second session of the ninth parliament, Mnangagwa said the government will impose stiffer penalties to deal with the unscrupulous businesses.

"Government has noted with concern the emergence of monopolies as well as cartels which stifle competition and engage in unjustified price hikes," Mnangagwa said.

"While government will not revert to price controls, we are nonetheless, in the process of reviewing the Competition Act in order to introduce deterrent penalties to combat such business malpractices," he added.

Zimbabwe has witnessed a wave of price increases of basic goods and services in recent months, amid a severe shortage of foreign currency despite liberalization of the exchange rate since February.

The price increases have fuelled inflation and eroded people's purchasing power.

The president said last week's events of exchange rate manipulation, which resulted in the Zimbabwe dollar falling sharply against the U.S. dollar on the black market, amounted to economic sabotage and said this should not be tolerated.

The Zimbabwe dollar, re-introduced by the government in June after the ban of the U.S. dollar, was trading at about 8.8 against the U.S. dollar on the inter-bank market in mid-July but almost doubled to 14.8 Zimbabwe dollars to the U.S. dollar a month later.

The black market rate was between 16.40 and 16.60 to the U.S. dollar as at mid-September but last week, the local unit further fell to about 20 against the greenback.

Mnangagwa said his government was aware of the challenges faced by the public in accessing cash, which have resulted in some unscrupulous traders selling cash in exchange for electronic money.

"Appropriate measures are being taken to address the cash situation, which include a gradual removal of arbitrage opportunities created through multitier pricing," he said.

The president also encouraged communal and small-scale farmers to grow traditional grains. The country experienced drought and a cyclone in the past season which has left more than half of the population in need of food aid.

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