Government has reversed its decision to scrap subsidies on grain as pronounced in the 2020 National Budget presented a fortnight ago following an increase in the price of basic commodities.
Finance Minister, Mthuli Ncube earlier said government was scrapping subsidies on wheat and maize starting January next year in order to reduce fiscal expenditure yet some retail outlets quickly reacted to the pronouncement by adjusting grain products prices upwards.
However, addressing youths at the 2019 National Youth Convention in Kadoma yesterday, President Emmerson Mnangagwa said government will continue subsidizing grain to cushion citizens from rising cost of living.
“We are now focusing on production, employment creation and youth empowerment. We must create safety nets to help our people. Two days ago I heard that the subsidy on mealie-meal and rice was removed. No,”
“I want to say this here, the issue of mealie-meal affects a lot of people and we cannot remove the subsidy. So I am restoring it so that the price of mealie-meal is also reduced. They are going to publish tomorrow that what we had done, we had not consulted the President,” Mnangagwa said.
Beginning of this week, some enterprising retailers were already reacting to the announcements in the National Budget by increasing price of mealie-meal, albeit in distorted fashion with some selling a 10 kg bag at $ 89 from $ 69 while others increased to highs of $ 100.
However, the Grain Millers Association of Zimbabwe (GMAZ) said they were not yet in a position to establish the accurate market reaction when contact for comment saying they still held stocks at subsidized prices.
“We issued a statement beginning of the week and we said we were going to establish the market reaction to that and we will give feedback in due course,” GMAZ spokesperson, Garikai Chaunza.
While reversing the decision to scrap subsidies on grain has been widely applauded in various quarters, analysts have indicated that the ZWL$ 63.6 billion budget will need to be adjusted to create resources for grain subsidies.
Some have also expressed skepticism over Mnangagwa’s utterances saying they might have been uttered for political expediency.
Zimbabwe has been battling grain shortages this year and has had to cover for the deficit through importation from neighboring countries while government subsidies have kept a cap on the ultimate selling price of grain products.