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Facing Supply-Side Revolt, Harare Threatens To Nationalize Key Manufacturing Firms

The government of Zimbabwe on Tuesday maintained pressure on businesses to cut retail prices while maintaining the production of essential goods, warning that it is prepared to take over and operate key manufacturing firms

The vehicle for such nationalization will be the Zimbabwe State Trading Corporation, an entity that has been inactive since 1999 when it divested most of its assets.

Minister Without Portfolio Elliot Manyika, acting as chairman of a cabinet task force on prices in the absence of Industry Minister Obert Mpofu, said the entity would take over from “delinquent manufacturers" and others "who might discontinue service.”

Extending Harare's effort to control prices by fiat, he also ordered state-controlled enterprises such Air Zimbabwe and cellular operator Net One to cut prices. Sources in touch with developments said most parastatals have ignored state directives.

Police spokesman Oliver Mandipaka said about 200 business people and 40 illegal foreign currency traders had been arrested in a crackdown dubbed Operation “Dzikamai,” Shona for “Calm Down.”

In Chinhoyi, police arrested the manager of a Bata Shoe outlet, charging Leonard Chitendero with failure to comply with the directive. Many shops there closed doors rather than cut their prices.

Authorities Tuesday focused on food producers such as poultry distributor Irvens, ordering the company not to reduce production in response to the price cuts.

Consumer panic buying, retailer inventory concealment, and manufacturer production cuts have emptied shelves in supermarkets and smaller outlets.

Economist Eric Bloch told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that Harare's strategy of seizing the means of production is unlikely to succeed.

Legal expert Lovemore Madhuku, chairman of the National Constitutional Assembly said government moves to freeze or roll back prices are unconstitutional.

Not only the business community but the central bank too has come under attack for placing limits on how much cash consumers and businesses can withdraw daily.

Vice President Joseph Msika in his capacity as acting president during President Robert Mugabe's trip to an African Union summit in Ghana, said Monday that the limit on withdrawals is keeping people and companies from buying what they need.

Attempting to rein in hyperinflation, the central bank last year set a limit on withdrawals of Z$1.5 million (US$10) a day for individuals and Z$3 million for companies.

Economist and consultant Luxon Zembe told reporter Jonga Kandemiiri he agreed with Msika because hyperinflation has devastated purchasing power.

More reports from VOA's Studio 7 for Zimbabwe...