President Mugabe is set to order a new round of price cuts days before Zimbabwe holds a general election, state media reported yesterday.

The state-run Herald said that Mr Mugabe wanted companies to reduce the prices of goods and services to February 12 levels when teachers and other civil servants were awarded salary increases. He hopes to win a sixth term in office on Saturday.

The 84-year-old President has convened a meeting with industry bosses, and will threaten them with nationalisation. “We are meeting with them in Harare. They will meet officials from the Ministry of Industry and International Trade and the Reserve Bank of Zimbabwe because we want them to reduce prices to those which were in effect before the salary hike,” Mr Mugabe said at an election rally.

“We are going to read the riot act to them. If they refuse, we will also not co-operate. We are going to use the Indigenisation and Empowerment Act, which stipulates that all companies, be they mines or manufacturing companies, with foreign ownership, without black shareholders or with black shareholders without a majority, should have at least 51 per cent shares reserved for indigenous people.”

Under new legislation companies may restructure or merge only if indigenous Zimbabweans hold 51 per cent of the shares. New investment would not be approved unless a controlling stake was reserved for locals.

In June last year the Government ordered businesses to halve the prices of their goods and services. It claimed that some were colluding with what it called Mr Mugabe's foes in the West. More than 12,000 retailers and manufacturers were arrested.

Shops often raise prices several times a day to keep pace with an inflation rate of more than 100,000 per cent.

— A British pilot was reported to have been arrested yesterday in Harare as he was preparing to fly Morgan Tsvangirai, the opposition leader, to a series of rallies. Brent Smyth, 31, who also has a South African passport, was detained at an airfield and his helicopter impounded. (AFP)

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