FOLLOWING a difficult 2023, in which Zimbabwe’s currency suffered one of its worst hammering on both the black and formal markets, the country remains in peril as hardships confronting consumers deepen. Last week, researchers at Imara Asset Management summed up the crisis when they remarked: “In 2024, the formal sector is weak. The retailers cannot sell product at prices that make economic sense and so trade goes elsewhere and government receives less VAT (value added tax) than it should. The banks receive limited amounts of deposits relative to the size of the economy and so their balance sheets shrink in real terms.” For an in-depth understanding of the troubles haunting consumers, our business reporter, Tafadzwa Mhlanga (TM) had a discussion with Phillmon Chereni (PC), director of corporate affairs at Consumer Council of Zimbabwe (CCZ). Below are Chereni’s impressions of the problems affecting consumers:
TM: For many consumers, 2024 started on a bad note, with new taxes that triggered price hikes. What has been the impact on consumers?
PC: New taxes announced in the 2024 National Budget proposals have since been reviewed downwards. It was expected that businesses that had increased prices of goods and services will also reduce prices. But toll gate fees, electricity tariffs and local authority charges have since increased. Businesses are passing on the costs to end users. Consumers are bearing the burden as disposable incomes have been further eroded.
TM: Which of the new taxes have had the biggest impact?
PC: Increases on toll gate fees on Zimbabwe’s prime routes and passport fees are, among others, impacting on livelihoods. There has also been an increase in taxes for spectacle frames.
TM: Where does the total monthly food basket stand now?
PC: As measured by the Consumer Council of Zimbabwe’s Low-Income Urban Earner Monthly Basket for a family of six, the cost of living measured in the local currency increased by 72% from ZW$3, 628 994.20 in December 2023 to ZW$ 6, 242 051.65 for January 2024. Most products in the basket went up by almost 80%. The increase in the prices of most basic goods in the family fasket is mainly attributed to the significant weakening of the local currency whose value depreciated by approximately 62% during the period under review.
Among the top shakers and movers in the basket were cabbage, salt, tomatoes, onions, and cooking oil, which rose by 97,7%, 63,7%, 56,4%, 50,6% and 44,8%, respectively. This is partly attributed to the high demand for these products during the festive season. In contrast, water and rates, washing powder, transport, and education recorded the least movement. Commodity prices increased sharply due to the steep depreciation of the local currency after the relaxation of the managed exchange rate by the central bank last month. Most supermarkets now display United States dollar (USD) prices as they are more stable compared to the local currency. They are strictly insisting on payments in the greenback for selected commodities.
- Mthuli Ncube abandons struggling consumers
- Mthuli Ncube abandons struggling consumers
- Zimbabwe’ banks are bleeding
- Brace for hard times, ex-CCZ boss warns
TM: What were the trends in US dollar prices?
PC: In USD terms, the basket decreased by 10,96% from US495,04 to US$440,79 during the same period. This is attributed to the dual pricing system, which the CCZ noted in the market. Most products, which are paid for in US dollars attract discounts. This is why prices dropped in United States dollars. But the prices of cabbage, salt, tomatoes, onions, cooking oil, and laundry bar did not drop.
TM: Tell us about trends in the price of services?
PC: As indicated above power tariffs, toll gate fees and local authority charges are among those that have increased. Some local authorities are actually demanding their payments in USD as a hedge against inflation, despite the fact that the majority of our consumers have no access to the USD.
TM: Have you discussed with Treasury how the new taxes have affected consumers? What has been the feedback?
PC: As CCZ, part of our mandate is lobbying and advocacy on behalf of consumers. We have represented consumers at various policymaking interfaces with business associations and regulators. We have raised many concerns that consumers have. We have been attending dialogues organised by our parent ministry, the Ministry of Industry and Commerce, seeking views from business, producers among other stakeholders to find solutions bedevilling market transgressions. Before the announcement of the 2024 National Budget, CCZ presented a paper to the Parliamentary Portfolio Committee on Budget.
TM: Are there any ways, in your opinion, that government can use to raise revenue without affecting consumers?
PC: Consumers will be affected by widening the tax base, which involves targeting certain sectors of the economy that were previously untaxed. These include the informal sector, which was previously excluded. Take note of the new Zimra tax dispensation.
TM: What are the major challenges facing consumers?
PC:Consumers are being affected by non-display of shelf prices, rampant use of disclaimer clauses, which include no returns, no refunds, no exchange, which are a violation of Section 42 of the Consumer Protection Act (CPA). Unfair pricing of goods and selling exclusively in United States dollars for certain products are also factors affecting consumers. The shortage of local currency in the market, especially bond notes, is affecting consumers. This problem is mostly experienced by the commuting public. Incessant power outages, high pricing of goods and shortage of some basic commodities like mealie meal, cement and others are also affecting consumers. The non-collection of waste and unavailability of clean water from local authorities, shortages of drugs in hospitals for chronic illnesses, inadequate equipment like cancer treatment machines, low disposable incomes for most consumers are also challenges affecting consumers.
TM: Tell us about wages with regard to the cost of living.
PC: The CCZ basket is a research-based document that could be used to benchmark incomes. It is sought by organisations when bargaining for salary adjustments.
TM: The Consumer Protection Commission (CPC) began its operations last year, conducting inspections of some of the products that consumers use. Would you say this commission has done a good job so far of weeding out defective products?
PC: Check with the Consumer Protection Commission for more detail and statistics. However, the CPC has been doing enforcement blitzs in different provinces such as Manicaland, Midlands, and Masvingo. I know a lot of businesses were found wanting in terms of compliance with new regulations.
TM: Are you collaborating with the CPC?
PC: The commission is a statutory body that was born through an Act of parliament, the Consumer Protection Act (CPA)…and is a regulator. The CCZ, in terms of the Act, is also regulated by this Act in doing our operational work. CCZ collaborates with CPC as the regulator and in other various activities of mutual interest, especially in line with consumer education and awareness programmes. We have been doing outreach awareness programmes on fair digital financial services, in partnership with other stakeholders, such as the Reserve Bank of Zimbabwe and Postal and Telecommunications Regulatory Authority of Zimbabwe, educating consumers on their rights, and responsibilities in accessing digital financial services.
CCZ has carried out blitzes targeting retail shops failing to comply with CPA provisions, such as use of disclaimer clauses and failure to display prices. Several shops have been fined.
TM: As CCZ, what do you recommend is needed to protect consumers from wanton price increases as well as substandard goods in the market?
PC: Price increases will remain a thorny issue that has to be addressed holistically by all sectors involved in the food supply chain in a bid to balance accessibility on the part of consumers, sustainability on the part of the industry to continue operating, with policymakers enacting enabling statutes to promote investment for industry growth as well as statutory obligations payments. Enforcement remains key in ensuring our borders are not porous so that smugglers who bring in sub-standards products are brought to book and held accountable.
TM: What can we expect from CCZ this year?
PC: We are targeting to continue with our education and awareness programmes targeting remote areas with our partners in line with the government's vision, we ‘leave no one and no place behind’. We believe in stakeholder engagements which will bring in policymakers, producers, and retailers. These dialogues will be held in major cities to create platforms for continuous engagement by all stakeholders. A CCZ Training Academy will be launched in collaboration with the University of Zimbabwe to train and empower both consumers and businesses to have an appreciation of the CPA, how to conduct themselves in the market, knowledge of their obligations among other things