THE biggest challenge right now is “are Zimbabwean assets and liabilities priced accordingly”. The answer is a strong NO.
The pricing in Zimbabwe seems to take the Bigger Fool Theory to heart.
This theorem says for every price there is a taker, that is, any item will get bought regardless of the price as buyers believe there is another buyer who will pay an even higher price for the same item.
Therefore, the argument is that “am getting it at a good price” fosters people to buy at whatever price is on the market.
The distortions have caused business to price goods and services in a relatively emotional manner that is affecting the general economy as a whole.
This line of thinking causes stock market and fuels stock market and commodity market booms and manias, which ‘in due course lead to busts and paranoias according to business dictionary definition.
From individual pricing of goods and services to the pricing of national assets/treasure has had a lot to be desired such that it has left the whole economy yearning for a serious alignment to be able to bring this insanity into check.
Pricing should be devoid of emotions but a measure of value or the demand and supply fundamentals being followed.
When prices become extortionist (high) or when they become slavery (low), the desired or intended results will not suffice.
Pricing has to be right otherwise nothing will make sense and if nothing makes sense chaos prevails, which leads to anarchy and a very dysfunctional economy.
This leads to the economy to move around in circles with no direction at all as it lacks fundamentals and growth becomes stunted.
This is a source of headaches for financial planning and reduces businesses to opportunities seekers, the informal traders.
No one wants this but situation on the ground points to that.
For instance (randomly thinking aloud) why is a loaf of bread at $1? Is that a fair price? Relatively fizzy drinks retail at the same price.
What are the implications when Chinese do it $1 for two loaves? Are consumers paying for inefficiencies and lack of economies of scale of industry/service providers?
These are double standards as pricing now becomes very subjective such that the one who can bully the market into accepting their price seems to win the war.
It never follows any fundamentals if you are sensational and you push your price and it’s acceptable and maybe due to desperation that is it you have a benchmark price and it gets replicated into the entire system through relative pricing.
When this pricing is wrong (as always the case) it distorts the whole pricing system.
Let’s look at mortgage payments. Are these fair prices of houses? Lending and deposit rates do they resemble some form of normalcy at all?
Tourism rates, do they resemble aspirations or emotions, maybe a multi-tier pricing system that also cater for locals?
There are so many questions to ask as why is airtime at a $1, $1 for 2 concept, school fees at record high(at times when school is half a day), mining renewal fees, Chronicle at $2 but Fingaz/Independent at $4.
Why is Harare cheaper than Bulawayo but all cheaper than Hwange and Vic Falls? Are stands priced right, houses and rentals, who determines these anyway ?
The value of my passport is it right with all its security features, properly bred dogs at that price are they worth it, and finally is a $1 worth $1 (one dollar) or we have managed to devalue it?
Civil servants salaries against the lowest paid and highest paid even in private sector? Pensions payouts, bank charges? What about insurance premiums, zero cost pricing and minerals pricing? Cost of doing business/licences etc.
Exported graduates come back to charge ridiculous prices for their service. Agricultural products never fetch fair prices.
Does 1kg represent 1kg of any commodity on the market? Some of my friends from the US have claimed Zimbabweans have reduced the dollar to 40 cents.
Whether it’s wanting to cream as much in terms of profits or sheer lack of knowledge coupled with lack of gradual patience in building empires or yester year profiteering mentality one never knows.
The truth lies in between and fact still remains — pricing is warped. Compare DStv prices locally and regionally? Someone is killed over $1 gambling disagreement what price to life is that? I can go on.
Tariffs, charges, are based on regional tariffs but service, product quality, salaries and benefits are not based on regional standards. Who is fooling who?
It’s because the initial pricing was totally wrong.
It’s just a sensational figure, which has a lot of inherent inefficiencies and tends to correct itself with time and leaves someone with an over-valued item.
Unfortunately, all these inaccuracies find themselves across other products and services and causes discord in the economy at large.
Let’s look at the current pricing regime.
Grocery prices are affected heavily due to the cash and RTGS pricing prevailing on the markets. Reversal of 15 percent levy on farming based products is highly commendable.
Responsible pricing should be guarded jealously.
We have the three-tier pricing system, which isn’t good on the market. This is ugly economics and it doesn’t help any economic actor at all.
Aspire to inspire before you expire. Do unto others as you would want them to do unto you. At this rate we will all perish with irresponsible pricing dysentery.