Price And Tariff Tragedy Of Regulated Sectors In Zimbabwe

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Over the past year or so we have seen inflation pressures in Zimbabwe with latest figure of 59,39 percent creating fears among Zimbabweans who do not want a repeat of the last decade’s experiences when hyperinflation reached alarming levels. 

We have seen prices going up especially since October last year. The price of bread was $0,90 a year ago but today bread is now costing $2,70, showing  a 200 percent increase! A two litre coke used to cost $2,25 but now it is a whopping $7,50 representing more than 200 percent increase.

All prices of goods and services have gone up by over 200 percent. The peak of it all came in January when prices of fuel went up from an average of $1,35 for petrol to the current levels of around $3,35 which is almost a 150 percent increment.

 But spare some thought on regulated prices and tariffs in some sectors, most of which have remained unchanged even when everything else has gone up.

A case in point is the electricity tariffs governed by Zimbabwe Energy Regulatory Authority (ZERA) that have been unchanged for close to a decade now. Our electricity tariff at 9,86 RTGS cents per kilowatt which is at most US$0,03 and at parallel market rate US$0,02 –  the lowest in the region if not in the world. Don’t waste money on gas – electricity is shockingly cheap.

While we have not had any load shedding over the past couple of years, with such sub-economic tariff, we have set ourselves up for success in having load shedding soon.

Another interesting scenario is Third Party Insurance which is regulated by Insurance and Pensions Commissions (IPEC). The premium has remained at RTGS$35,60 (US$8.75) and the cover at RTGS$2,000. Certainly this is as good as not being covered as $2 000 cannot cover much even a small damages to the vehicle. IPEC wake-up. You are killing the industry

Mobile money service providers, which by all intents and purposes is Zimbabwe’s currency has not changed tariffs. How are they managing? Something will give-in. The maximum tariff to send $500 was $2,36, which now translates to US$0,59. This is three-times cheaper than MTN Money, Airtel Money, M-Pesa or any other mobile money service providers.

The Reserve Bank of Zimbabwe is well versed yesteryear experiences of price-controls. Let’s not walk that path again. No! We lost money with collapsing banks. Mobile money is solid from an ownership point of view but don’t run down their business with sub-economic tariffs.