ZIMBABWE: Zimbabwe businesses fail to enforce government price freezes

Record ID: 825321

  • Title: ZIMBABWE: Zimbabwe businesses fail to enforce government price freezes
  • Date: 13th July 2007
  • Summary: VARIOUS OF PEOPLE WAITING TO ENTER SHOP
  • Embargoed: 28th July 2007 13:00
  • Keywords:
  • Location: Zimbabwe
  • Country: Zimbabwe
  • Topics: Economic News,Domestic Politics
  • Reuters ID: LVADVLW21PWRNNO9DFJVA9ZBD8D1
  • Story Text: Hundreds of Zimbabwean shop owners and businessmen have been arrested for defying the price freeze.

    Zimbabwe has sent crack police to enforce price freezes in the rural strongholds of President Robert Mugabe, where businesses have failed to heed measures aimed at reining in inflation and halting economic collapse.
    Mugabe's government, grappling with inflation of 4,500 percent, ordered businesses last month to roll back and freeze prices on petrol, bread, milk, cooking oil and other key consumer items after a sharp increase in their prices.
    The move has prompted panic buying, leading to empty store shelves and long lines at petrol stations, and pushed the economically depressed southern African nation closer to breaking point.
    "You have to look at the other side where you have reports of companies that are saying that the controlled prices are actually maybe below the cost of manufacturing the product or actually procuring the product. In such instances you have some companies which might be compromised by the whole exercise," economic analyst Farai Dyirakumunda told Reuters.
    So far, the crackdown has been concentrated in the capital Harare and other urban areas where workers have borne the brunt of the severe economic crisis. It has led to arrests and fines for 1,768 executives and companies.
    The chief executive of Zimbabwe's largest supermarket chain has been arrested and faces 41 charges of defying the price freeze, while police on Wednesday seized 49 commuter buses and detained the drivers for overcharging, Mandipaka said.
    Public commuter operators have grounded their fleets, citing fuel shortages and a forced 60-percent reduction in fares, leaving thousands of commuters stranded.
    The rollback programme was extended to rural areas after the government accused some businesses of diverting goods to rural shops were the price freeze had not been enforced.
    Zimbabwe, once one of Africa's most prosperous countries, is in the eighth year of a deep recession, marked by chronic shortages of food and fuel, soaring unemployment and poverty and the world's highest inflation rate.
    Rural Zimbabweans, who have been forced to engage in informal trading and open small shops to supplement what they make from subsistence farming, are increasingly feeling the pinch of the government's price controls.
    Mugabe, who blames the economic problems on sabotage by Western nations upset over his seizure of thousands of white-owned farms, has threatened to nationalise companies who hike prices without cause.
    The 83-year-old Zimbabwean leader, in power since independence from Britain in 1980, has said that those resisting the new economic measures are part of a Western plot to topple his government.
    While the price crackdown has brought relief to hard-pressed consumers who can find goods in the stores, basic foodstuffs, such as maize-meal, sugar and cooking oil, have disappeared from shops.
    Economic analysts warn that many businesses could shut their doors rather than continue producing at a loss.
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