A real example of the impact of Zanu-PF’s price control policies on an ordinary business

I know someone who is involved in the running of a pharmacy.

A bottle of cough mixture had its price slashed to Z$200,000 during the recent government price blitz.

The pharmacy has just received a new consignment of the same item from the local manufacturer and the approved cost price is now Z$1,506,400.

With the permitted mark-up plus VAT, this will retail at Z$2,078,832.

Having had their stocks depleted and their capital eroded, the owners of the pharmacy now have to attempt to finance new stock at much higher prices. The government’s price policies meant they could not previously factor in inflation so they have been prevented from taking the usual business approach to dealing with fast rising costs. The alternative, a bank loan, is apparently not an option because the banks won’t offer them finance as the risk to them in this business/political climate is too great.

But, what about the consumers? Even if this pharmacy does manage to find the money to re-stock (and doesn’t go out of business) consumers will suddenly find that they are now going to have to pay some 939.41% more for the same item and some will no doubt accuse the pharmacy of profiteering!

Is this the government’s plan, to come up with policies that create scapegoats and deflect attention away from them and their inability to run the economy?

This is just one of the many anomalies that affects us everyday.

Technorati Tags: Zimbabwe, economy, price control, inflation, hyperinflation, poverty, shortages

This entry was posted by Just Business on Tuesday, September 11th, 2007 at 12:28 pm. You can follow any comments on this entry through the RSS 2.0 feed. Both comments and pings are currently closed.