Prices have once more gone up in local currency. Many private schools are fighting with parents over dollarisation. Some schools which used to get between US$1500 and $4.000 per child a few years back now want the USD equivalent of those previous amounts!
In an inflationary environment everything keeps going in one direction…UP!
With no significant forex inflows, we can expect no change in the pricing systems. Everyone is charging in forex or forex equivalent.
So its a battle the government is not going to win in the short to medium term….the business sector chasing the rate and the rate running away. The government on the other side trying its best but without massive forex injection, its a tough battle.
Stop Gap Measure
Most of the goods you are finding in shops are imports anyway…even the oranges going for RTGS 75 per pack are all imports, we have few orange farms around. When we were in Malawi, we witnessed cross borders buying agricultural produce for sale at Mbare Musika.
Beitbridge receives more than 40 buses everyday and they leave loaded with imported goods. Musina has become one big warehouse for Zim goods….20 years ago the town resembled a growth point but now its a fully grown town and if Zim keeps sourcing its goods from there-it will soon become a major city.
So we have discussed this solution before…and we come back again. Some of the prices we have especially in Harare are unreasonable…yes we are dollarising but the profit margins even go as far as 100%…it makes no sense at all.
So our solution is transfer Musina into Harare, Bulawayo, Mutare or Gweru..
Create special zones whereby foreigners set up their businesses-they sell in forex at low prices and on exit, customers pay duty like they do at borders.
In SA prices are more or less uniform even when goods are transported by road from Joburg to Capetown. The Game Store in Zambia has prices similar to SA despite the goods passing through Zim.
The distance between Joburg and Cape town is similar to Joburg to Harare.
Local industry protection
We should ramp up local production, protect our own industries for job creation and economic development…however they too are not immune to forex shortages and the economic environment, their cost of production is going up everyday and making their products noncompetitive.
So in the short run, bring the SA manufacturers and they will take the offer with both hands…more revenue growth. They are doing it anyway through Musina and Joburg.
They will sell products at a fraction of what we are witnessing around town. They will enjoy economies of scale through importing in bulk( without paying duty)…remember the duty is paid by customers when they exit the established EPZ premises.
Who will cry the loudest?
Cross border traders,
Local manufacturers and retailers,
Buses that ferry cross borders,
Who will smile the widest?
Consumers enjoying a wide variety of goods at low prices,
ZIMRA as there will be less smuggling,
Employees employed at such facilities,
SA companies seeing opportunities,
This can be a great entry route of foreign investment as innovative local companies can partner with South Africans. More foreign companies can be excited by the opportunities and set up here. As long as they can bring products, sell in forex and able to remit it….they will flock to the new opportunities.
Of course there will be an uproar from the local business community who stand to lose out as customers will even be able to buy and resell at cheaper prices than most local shops. They will have to innovate and adapt or die….
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