ZIMBABWE: Parallel market flourishes as shelves empty

[ This report does not necessarily reflect the views of the United Nations]

HARARE, 6 May 2005 (IRIN) - The general shortage of commodities in Zimbabwe has created a burgeoning parallel market, which is limiting access to basic items for most of the poor.

Tonderai Mukerezi, a public relations officer for the Consumer Council of Zimbabwe (CCZ), told IRIN: "The emergence of the black market is a sad development and will affect the consumer, because goods are sold at unbelievably high prices, and the cost of living will soar."

An informal survey carried out by IRIN around the capital, Harare, revealed that most shops had run out of basic commodities, such as sugar, maize-meal, flour, cooking oil, toothpaste and margarine.

Almost all these commodities are readily available on the parallel market and in backyard kiosks, where they are being sold at prices up to three times the official rate.

In Mbare, a poor suburb with abundant unofficial market activity, a 10 kg bag of maize-meal sells for Zim $90,000 (about US $15) compared to the official price of Zim $35,000 (US $5.72), while a 2 kg packet of sugar is available for Zim $15,000 (US $2.45), instead of the gazetted Zim $7,500 (US $1.22).

A 750 ml bottle of cooking oil fetches Zim $22,000 (US $3.59), almost double the official price of Zim $13,000 ($2.12), while a tube of toothpaste sells for Zim $20,000 (US $3.26), which is Zim $13,000 (US $2.12) more than the official price.

The government introduced price controls on basic commodities in November 2001 in a bid to protect consumers from rising costs on basic commodities. In November 2002 price controls were extended to cover a wider range of goods, despite protests from manufacturers who complained that they could not cover their production costs.

Harare resident Timothy Musa told IRIN that despite the higher prices of commodities on the parallel market, he was happy that he had finally managed to purchase maize-meal at Mbare.

"We had gone for a whole week without maize-meal because it is not there in the shops. A neighbour tipped me [off] to come here [to Mbare], and despite the high price, I am relieved that my family will have something to eat this evening," said Musa.

Before paying for the 10 kg bag, Musa insisted on the trader opening it for inspection, as they have been known to cheat by adding sand.

"Life has become so difficult for me - just imagine ... I had to lie to my employer that I was not feeling well, in order to come and look for the maize-meal here. To make matters worse, the commodity is being sold at a price I can hardly afford," said Musa, who works as a school cleaner.

A thriving black market for fuel has also mushroomed - in downtown Harare motorists queue along the streets of the central business district instead of at fuel stations.

Along one such street, overlooked by the head office of the state-controlled National Oil Company of Zimbabwe (NOCZIM), young men drain petrol and diesel from old, non-running cars to sell to waiting clients.

The fuel is sold in five-litre containers at Zim $14,000 (US $2.28) per litre, as opposed to Zim $3,450 (US $0.56) for petrol and Zim $3,600 (US $0.58) for diesel.

Private procurers and NOCZIM cannot meet the demand because they lack the foreign currency to import fuel.

At the CCZ Mukerezi said the parallel market, which flourished in 2003 during another wave of shortages, had re-emerged recently because of a variety of factors, chief among them the scarcity of foreign currency.

"The reasons for the emergence of the black market are varied: there are companies that are genuinely experiencing foreign currency problems, with which to import essential ingredients used in the manufacture of products," he told IRIN. "As a result, some producers have scaled down their operations, leading to shortages in the market."

Mukerezi also blamed some wholesalers and retailers for causing artificial shortages by conniving to divert goods to the black market.

"We have noticed that there are some unscrupulous entrepreneurs, who are exploiting the situation to charge the prices they want; hoarding by both producers and consumers is fuelling the black market," he alleged.

A manager at a leading manufacturer of oil products told IRIN that the shortage of foreign currency was making it difficult for his company to produce goods subject to government price controls.

"Without forex it is difficult for us to keep on manufacturing products, since most of our raw materials are imported. In order to remain viable, we have had to produce non-controlled goods, which we then sell at profitable rates, and that is why you see there is a shortage of such things as cooking oil," he explained.

The US dollar currently fetches about Zim $18,000 on the parallel market, against the official rate of Zim $6,117.

Everton Mpambwa, a Malawian truck driver who regularly travels between Harare and Lilongwe, the capital of Malawi, makes extra money by trading US dollars on the parallel market. He then uses the local currency to buy commodities at official prices, which he sells in Malawi.

"You get lots of Zimbabwean dollars when you go to the black market - that means you will buy goods this side [in Zimbabwe] at cheap prices, and then sell them again in Malawi," Mpambwa told IRIN, adding that he hides the commodities among the items he transports to his company in Lilongwe.

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