The Newsday newspaper has published an editorial in which they assert that the current government policy of command economics where they control everything and command businesses to follow their dictates without consulting the same business is not working and will fail just as it failed under former President Robert Mugabe during the first decade of this century.
Business people do not just wake up and arbitrarily increase prices, as these are determined by market fundamentals. The threat to “whip business into line” is not going to improve the economic situation in the country. It will, in fact, worsen it. The Mnangagwa administration needs to depart from its “command” approach because it will not work — just like it never worked under Mugabe, but only impoverished the population more.
Mnangagwa’s admission that he did not understand why there was continuous rise in prices, simply shows he is either lights out on economic fundamentals or his ministers are misleading him.
Prices are determined by market forces. If those selling goods have to import them and cannot access foreign currency from the banks, they will do so on the black market to keep their business afloat, and that consequently means they would factor the cost of the foreign currency in their pricing models.
The editorial comes after the President threatened businesses with a clampdown if they keep increasing prices. The Newsday concludes that the President is either clueless on what’s happening in the economy or he is being misled by his juniors.