HARARE – The government on Thursday said it had agreed a maximum price for mealie-meal with millers, days after restoring a subsidy on the staple.
Mealie-meal prices more than doubled last week after finance minister Mthuli Ncube announced he was scrapping the subsidy which he said was “open to abuse and placed a huge burden on the fiscus.”
“Under this new subsidy model, the government will fund the procurement of grain at market prices and selling the same to registered to maize millers to ensure availability and affordability of the commodity,” Ncube said in a statement.
“The government will ensure that the requisite monthly tonnage of 40,000 metric tonnes required for producing 32,000 metric tonnes of roller meal will be timely availed by GBM to members of the Grain Millers Association of Zimbabwe.”
Ncube said under the agreement with the millers, whose association brings together 95 percent of market, the retail price of a 10kg bag of mealie-meal would come down to ZWL$50 from over ZWL$100 currently.
“This model will create fiscal space for treasury to finance other social protection programmes,” Ncube said.
Economist Eddie Cross, who sits on an advisory board for the central bank, this week warned that the current blanket maize subsidy will cost nearly ZWL$3 billion in the next 12 months.
Cross is proposing, instead, that the Reserve Bank of Zimbabwe could print vouchers which could be exchanged for mealie-meal at any store or supermarket.
“This would enable the absolute poor among us to buy their basic needs to survive. Subsidies on an untargeted basis would cost us many times more than that and achieve little, most of the expenditure wasted on corruption and on other beneficiaries who do not need subsidy,” Cross said.
The United Nations said on Tuesday it was procuring food assistance for 4.1 million Zimbabweans – a quarter of the population.
Food shortages are being exacerbated by runaway inflation and climate-induced drought.
