Mugabe should know his currency is a stale joke
July 1, 2009
Zimbabwe's "inclusive" government is in two minds whether to reintroduce its joke currency. President Robert Mugabe said on Friday that he would bring back the old Zimbabwe dollar, which traded at Z$7.6 billion to the US dollar before it was phased out at the start of this year.
But a day later, Prime Minister Morgan Tsvangirai said no chance.
By the time the currency was declared officially dead, the authorities had removed 25 zeroes between July last year and February this year.
With the dollarisation of the Zimbabwean economy, hyperinflation disappeared overnight. When it was last officially measured last July, it was more than 200 million percent, but it was estimated to be in the "quadrillions of percent by the third quarter", according to a report from the Imara Group, which hosted an investor conference in Harare over the past two days.
Official access to foreign currency transformed the situation. Once it was possible for importers to import, goods returned to the shelves. At the same time, the limited quantities of hard currency made consumers resistant to high prices.
The result: increased competition, which brought falling prices.
According to the International Monetary Fund, the economy contracted 14 percent last year, following a 40 percent cumulative decline between 2000 and 2007. The current account deficit rose to 28 percent of gross domestic product last year from 11 percent in 2007.
By the end of the year, Zimbabwe had US$6 million (R46m at yesterday's exchange rate) in international reserves. External debt was US$6bn.
Retailers' bravado
Supermarket heavyweights and mass retailers, which are the focus of a probe by the competition commission into possible anti-competitive behaviour, say they welcome the inquiry, but no doubt it's being said through gritted teeth.
The spotlight is on grocery outlets Woolworths, Spar, Shoprite and Pick n Pay, which account for 60 percent of grocery sales; and on wholesale retailers Massmart, which owns Makro, and Metcash, which owns Metro Cash and Carry.
The retailers say the investigation will put to rest the persistent speculation that they are uncompetitive and charge excessive prices. But the probe will not only consume their resources (no doubt teams at each company are already being assembled to manage the inquiry), but provide insight into their operations. It could, despite their bravado, show up areas of concern.
About 10 years ago in the UK, a similar inquiry was launched by the competition authorities into grocery retailers. It was premised on consumers' perceptions that food prices were higher than in other European countries. It focused on 24 grocery retailers, including Marks & Spencer, Sainsbury and Tesco.
The UK inquiry found at least two pricing practices were problematic. One that was considered against the public interest was below-cost selling. Although it benefited consumers who could get to big stores, those who were less mobile and shopped at smaller local outlets were prejudiced.
Another troublesome practice - called price flexing - resulted in retailers charging higher prices for items at some of their stores than at others if there were no competitor stores operating nearby.
Despite finding that below-cost selling and price flexing had adverse effects, the UK competition authorities recommended no remedy, saying that although this was unusual, it was appropriate, as the market was generally competitive.
This is a pointer for the local competition authorities. Keeping dominant players in any sector in check is worthwhile, but it would be a shame if the cost for retailers of greater regulation resulted ultimately in higher food prices. page 19
Greens vs dreams
Assuming that money is no object, South Africans are nearly twice as likely as other citizens to choose their dream car over an environmentally friendly one. A global survey of 13 500 people conducted across 18 markets by market research group Synovate found that 57 percent of South Africans would disregard green considerations to buy their dream cars, compared with a 31 percent global average.
Just over one in five South Africans would favour electric or hybrid environmentally friendly vehicles, versus a 37 percent global average.
The two options coincided for a mere 5 percent of 511 South African respondents, who said green cars were their dream cars. While a low number of Germans said the same (8 percent), 58 percent said they would buy an environmentally friendly car over their dream vehicle.
By comparison, the dream cars of 47 percent of Koreans, 37 percent of Egyptians, 22 percent of Chinese and 16 percent of Brazilians are green. Most Brazilians (57 percent) would eschew their dream cars in favour of environmentally friendly ones.
A comparison of results from China and the US shows that Chinese citizens are way ahead on the green curve. While 35 percent of Americans would select their dream car, green considerations aside, only 21 percent of Chinese said the same. And 53 percent of Chinese would choose greener vehicles, against 23 percent of Americans.
Synovate says the results are not surprising given Chinese government concessions for green vehicle manufacturers and drivers, as well as the highlighting of China's poor air quality during last year's Beijing Olympics.
In South Africa, Synovate says, the results show that the status-loaded car is "probably the closest product that comes to a visible expression of who a person is".
All in all, six in 10 of the world's people would buy green. Of these, two in 10 say green is their dream car.
Car makers are already on track to pairing green with dream, and South Africans will eventually cotton on to the trend.
Edited by Peter DeIonno. With contributions by Ethel Hazelhurst, Samantha Enslin-Payne and Ingi Salgado
|
|
