eBusiness Weekly
Albert Norumedzo
The events of the past couple of weeks were a horrific reminder of the dark part of our economic history, which no one wants to relive. The mere thought of those days sends shivers down the spine of everyone across the populace.
This reminds many of the days of long queues for fuel, empty shop shelves and sleepovers at banks to get money, which lost value while one was still in the queue; the days when money changers were a menace on the streets like the present day mshikashika (illegal taxis). A fortnight ago many people, if not all, including myself, left no stone unturned trying to hedge against a possible repeat of the crisis of 2006 to 2009.
To expect consumers, business and capital market participants to relax when faced with the prospect of shortages, hyperinflation and unrelenting economic deterioration would be asking for too much, if not the impossible.
So, when reports of shortages of fuel and basic commodities start spreading like a veld fire in August, you can be sure that panic will reign supreme, true to the adage “desperate times call for desperate measures” sets in.Consumers start stocking supplies in anticipation of shortages, anticipated shortages then become tangible reality, as basic commodities vanish from the market shelves, not because manufacturers produced less than in the previous periods, but because consumers are hoarding goods enough to sustain them for up to 6 months while industry has limited capacity and constrained by foreign currency shortages.
Any panic at this point will only makes things worse. Admittedly, the economy is battling serious challenges, which need to be addressed at the fundamentals level to tackle the underlying causes, which in our case entails addressing production and export capacity bottlenecks. However, it is imperative to note that all economic agents, consumers, businesses and market regulators have a collective role to contribute positively towards solutions to attending challenges.
A crisis of culture and good consumer and business ethics cultivated by survival instincts, which evolved through years of hardship, has created a deep rooted sense of selfishness, profiteering, short sightedness and loss of pride across the spectrum of economic agents; from consumers to producers and other economic players.
Some consumers no longer prefer local products, they lack trust in local capacity and even in the solutions conceived by policy makers, perhaps for good cause, but regardless of the reason, it is clear that a lot needs to be done to recreate a culture of good business and consumer ethics.
True to economic theory, price is a function of demand and excess demand unmatched by supply will result in inflationary pressure to regulate the allocation of scarce goods; the Zimbabwean situation on the other hand takes this theory to extremes. If it rains the price of public transport doubles from 50c to $1, within a day the price of a 2 litre cooking oil bottle had gone from an average of $3,50 to $5,50 without cause or justification deriving from changing fundamentals.
Some may argue that retailers are buying foreign currency on the black market to import foreign goods but the majority were still getting the cooking oil from local suppliers at unchanged terms and some just saw an opportunity to make a quick extra dollar.
Even without cause, you find small and often informal retailers using a 4 tier pricing model; one for cash (bonds), cash (US$), plastic money and Ecocash. It is understandable that some are or were incurring costs to get the products into the country due to the currency premiums and in turn pass on the costs to consumers, but in most cases even when one has no justifiable cause, the price is just hiked to take advantage of the situation.
Reports of new notes fuelling the black currency market indicate the rot that exists even in the financial services sector, and the questions that begs for an answer is “where are those money changers getting the cash? It is the pursuit of selfish interests by people who scavenge for riches in the misery of the moment, at the expense of the general populace.
Admittedly, the economy is faced with real challenges that are increasing the cost of doing business, but the lack of good business and consumer culture or ethics is also playing its part (in no small way) in making things worse. In an economy of 14 million people, it is almost impossible to control the actions of all economic agents, the regulatory authorities may try to put measures to protect the economic system, but keeping things under control would be much easier if the culture, ethics and discipline were right.
The advent of social media brought a lot of communication and networking convenience, but with it also came a serious lack of responsible behaviour or conduct, which has the toxic capacity to cause panic and pandemonium. Panic and the spread of unsettling rumour has caused historic market crushes that brought down entire economies; in some markets trade is suspended when panic starts to spread across markets because of the damage it can do.
Everyone has a responsibility to participate in economic growth and recovery of the country, while it is a right to complain over poor service and policy, it is everyone’s responsibility to behave responsibly in all our respective capacities so that we can be together and moving in the same direction. We need not develop a spectator mentality to problem solving, that of watching from the terraces and complaining while we fold our hands. Everyone needs to take responsibility and actively participate, thinking about the bigger picture.
Yes, challenges are there and they are real, but what role are we individually playing as consumers, producers, regulators, service providers to help address the economic challenges that the economy is facing?
Albert Norumedzo is an Equity and Alternative Investment Analyst who writes in his own capacity, he can be contacted at [email protected]
