Long-suffering Zimbabweans face bleak prospects in 2007 as a spate of price increases and industrial action by medical personnel appear set to reinforce a seven-year-old economic crisis.
Just a few days into the new year, prices of most goods and services have gone up in sympathy with last week’s increase in the cost of fuel. Commuter omnibus operators hiked transport fares by up to 60%, citing the escalating cost of fuel.
A trip to Harare’s working-class suburbs of Budiriro, Glen View and Kuwadzana, which used to cost Z$500, now costs Z$800. Commuters to the capital’s dormitory town of Chitungwiza now pay Z$1 000 for a single trip, up from Z$700 last week.
A litre of diesel or petrol is now retailing at ZS$3 000, up from Z$2 200 in mid-December. The price is even higher on the black market where desperate motorists fork out anything up to Z$4 000 a litre, depending on the availability of the commodity on the official market.
The price of fuel tracks exchange-rate movements, with the United States greenback on Wednesday exchanging hands at between Z$2 900 and Z$3 000 on the unofficial but thriving parallel market. The US unit was last week fetching Z$2 700 on the parallel market where the bulk of foreign currency is traded.
The official inter-bank exchange rate remains fixed at one US dollar to Z$250.
The increase in the cost of fuel triggered hikes in the prices of maize meal, cooking oil, flour and salt. Most shops in Harare have also run out of the staple maize meal, while a 10kg bag of unrefined mealie meal was on Wednesday selling at Z$4 000 on the black market. The same bag used to cost Z$1 200 two weeks ago.
Millers blamed the shortage of maize meal on the state-run Grain Marketing Board (GMB), which has the monopoly on the marketing and distribution of grain.
“We have not received any supplies from the GMB in recent weeks. We gather that their stocks have run dry,” said an official with the Millers’ Association of Zimbabwe, who asked not to be named.
No comment could be obtained from the GMB on Wednesday.
Zimbabwe’s annual maize consumption is conservatively estimated at between 1,8-million and two million tones against last season’s total production, which independent agricultural experts say was below one million tonnes.
Oil packaging
Adding to the woes of Zimbabwean consumers is the decision by vegetable oil processors to switch production to bulk oil packaging instead of smaller-size containers.
This means that, besides the escalating cost of cooking oil, consumers will now have to contend with the fact that smaller, cheaper bottles will soon disappear from shop shelves as manufacturers supply bigger containers whose prices are not controlled by the government.
The switch is meant to evade a government crackdown on several manufacturers whom it accuses of flouting price controls on most basic commodities in pursuit of super profits.
“We can’t afford to produce at a loss, so we have to produce for big customers such as Cairns [an industrial food manufacturer],” said one executive with a top oil-manufacturing company who spoke on condition that he and his company were not named for fear of victimisation by the government.
The government’s gazetted price of a 750ml bottle of cooking oil is Z$775, but the commodity is selling at Z$3 000 in the few shops with the product.
Oil expressers contend that a 750ml bottle should retail at Z$2 500 to recoup costs in the current trading environment marked by acute foreign-currency shortages and out-of-control inflation, which at 1 098,8% is the highest in the world.
School costs
Besides struggling to access food, most parents will have to contend with the escalating cost of school fees, uniforms and stationery. As Zimbabwean schools open on January 9, parents will battle to balance the needs of running a home and ensuring their children remain in school.
Tuition fees per term for most government day schools are likely to go up to between Z$45 000 and Z$50 000, from about Z$15 000 during the final term last year.
Most parents will only get to know the new fees at the start of the first term next week after Education Ministry delays in approving increases. The ministry last month gazetted fees for private and government schools, but the private schools won a reprieve after a protracted court battle.
Day government school fees were pegged by the ministry at a maximum of Z$96 021 and a minimum of Z$40 542, but schools still have to seek government approval for the new charges before telling parents.
Economic analysts this week said Zimbabwe is likely to sink deeper into crisis in 2007, warning that Zimbabweans should brace up for further price shocks in the first half of the year as inflation wreaks havoc in the Southern African country.
“It is inevitable that inflation is going to accelerate because all the economic fundamentals are horrendous,” said Peter Robinson, an economic consultant at Zimconsult.
Tobacco auctions
The analysts said living conditions of poor Zimbabweans are likely to tighten during the first quarter of the year on the back of the free-fall of the Zimbabwe dollar against major currencies.
“We expect the situation to get tighter as pressure mounts on the [Zimbabwe] dollar until around April when the tobacco auctions will hopefully improve the situation on the foreign-exchange market,” said an investment analyst with a commercial bank who refused to be named for professional reasons.
The marketing season of the once-boisterous tobacco industry opens towards the end of April or in early May and usually eases pressure on the foreign-exchange market — of course dependent on how much of the golden leaf would be available.
The analysts noted that Zimbabweans must also prepare to face another hike in healthcare costs following this week’s strike by state doctors who are pressing for a review of their allowances and working conditions.
President Robert Mugabe’s cash-strapped government will have to hike charges at public hospitals that service most Zimbabweans in order to raise cash to pay striking doctors.
Meanwhile, some critics project that inflation will climb past the 4 000% mark in 2007, which was also predicted by the International Monetary Fund late last year.
Zimbabwe has since 1999 been grappling with an agonising economic meltdown that critics blame on repression and mismanagement by Mugabe, a charge the veteran leader denies.
As a result of a poor grain harvest, up to two million Zimbabweans are living on the benevolence of international food-aid agencies. — ZimOnline