Are We Progressing or Regressing, Economists Question Zimbabwe’s Economic Path?

By Shingirai Vambe

Zimbabwe socio-economic situation has declined in the past few months, confirming the analysis and facts by economist, the Zimbabwe Statistics Agents (ZIMSTATS) and the business confidence index report by the CEO Africa Roundtable issued few weeks ago on the basis of a negatively skewed economic environment reflected by a downward business confidence.

The CEO Africa Roundtable, Board Chairman, Oswel Binha said the Zimbabwean economy has been exposed to external and internal shocks, key being the widening exchange rate premium, averaging 50 percent for the year 2023, influx of Statutory Instruments which add up to 228 SIs and financial sector instability.

Binha said these driving factors have a huge bearing in the business environment and often sub-optimal policy implementation process.

2023-2024 festive exposed the economic situation in the country, with the moral and spending sprees declining, having two major supermarkets, Thomas Meikles (TM Pick n Pay) and OK shops recording losses as compared to yester-years when citizens spending goes up during the year-end. The companies have been the major retail employers over the years, instead there has been reduction of labor force and removal other necessary expenses within the industry.

Communications officers of the two entities told the Post On Sunday Newspaper that they have been facing challenges and reduction in sales means losses and loss of jobs for some employees thus reducing the wage bill.  These are the results of the negative economic shocks, they said.

The last quarter of the year, 2023, saw an increase in cost of goods and services, coupled by shortages of some products in the market. The business community claim, it is in response to the budget presented by the Minister of Finance and Economic Development and Investment Promotion, Professor Mthuli Ncube in December 2023.

Increase and introduction of new taxes has created a panic and change in the market. Instead of providing some tax relief to citizens, Ncube introduced new taxes and levies. He proposed to review upwards the strategic reserve levy by US$0,03 and US$0,05 per litre of diesel and petrol, respectively. He proposed an upward review of toll fees on premium roads, that is, Harare-Beitbridge and Plumtree-Mutare and other roads. Again, Ncube proposed that passport and selected fees charged by the Central Vehicle Registry be increased.

However, the ZIMSTATS has issued a report on the current Poverty Datum Line, (PDL) showing the daily earnings of employees in Zimbabwe are $0.66c per day and USD $20 per month when an average family of five is expected to spend at least spend US $500 per month on food, health, accommodation and education for the same period.

As the festive fever end, projections and a high expectation is on the education sector, just like the previous years, more and more dropouts are expected this year 2024 due to hardships and unemployment across the divide.

Schools have come up with strategies of exclusion, the fight and woes between parents, the ministry and schools has grown over the years and bottlenecks are vividly seen through the outcome of examination results.

Professor Gift Mugano told this publication that citizens should brace for more and difficult times in 2024 and ahead.

“The real challenge is most people are falling into poverty, 49 percent, living in extreme poverty,” said Mugano.

In his presentation Binha said, “The Business Confidence Index rates was -40.9, a clear indication that the CEOs and senior executives in the country are pessimistic about the overall economic performance, largely due to the prevailing adverse business environment, unstable macroeconomic conditions, exchange rate and inflation volatilities, low business confidence and the around policy making processes”.

The Chief Executive of the CEO ART, Kipson Gundani told Journalists in Harare that there was lack of political will, to bring sanity in the economy of the country.

“There is an overall negative outlook due to political  instability, Politics takes its tall to the people’s daily lives” added Gundani.

As expected during the festive, traveling and booming of business  in the tourism sector; contrary to reports going round in the social media, the sector recorded a decline with majority of the players writing below 40 percent business during the period, Victoria Falls is not spared, with a standard family of 5 expected to folk out more than US$2000 flying to the Falls resort and more than the same amount for meals and accommodation for 3 nights.

Zimbabweans failed to spend, they had nothing to spend and little to feed their families. According to an analysis on tax by the Zimbabwe Coalition on Debt and Development, citizens throughout the country are experiencing high taxes, with the Zimbabwe Revenue Authority continuing to exceed targets, despite weak economic activity.

According to the available data online, a decline of 4% was recorded in the country’s industry ironically, local sugar industry suffered a 14% sales decline due to the influx of cheaper imports necessitated by the government’s policy initiatives. Statutory Instrument 80 of 2023 which gazetted a list of 14 basic commodities exempting from customs duty payment on importation for the next six months which included sugar, powdered milk, rice, maize meal, flour, laundry and bath soap, washing powder, toothpaste and petroleum jelly, resulted in these losses.

The policy sort to solve the shortage challenges which was a result of a volatile currency instability and exchange rate.

Gundani said not all SIs had a negative impact, some were on the positive side but lacking inclusivity and proper consultation from key stakeholders. He added and said policy makers ought to do proper consultations as required by the law so as to come up with laws that speak to the needs of the people.

“The ultimate barometer of any environment is measured by the standard of life of the people governed by the laws of that particular country of state. The well-being of people is determined by the cost of goods and services, access to cheap loans for business ventures and availability of affordable power or energy which comes through the willingness of Policy Makers,” added Gundani.

According to the Zimbabwe Association of Microfinance Institutions, there was a decline in borrowing in the last quarter of 2023 and micro financiers are facing repayment challenges. The Revenue Authority has put in stringent measures to nip the vendor bud so as to force them to fit in the tax bracket, however, Zimbabweans are subjected to various tax heads, such as, pay as you earn, the 2% intermediated mobile money tax (IMMT), 15% value-added tax, among others.

Meanwhile, the price of soft drinks has gone up because of 2% sugar tax. Wholesalers are selling a crate of drinks with 24 units at a cost of US$7 from US$5, and Texas Meats has issued a statement that with effect from January 1 2024, they will be including 15% tax on their products, following the promulgation of SI248 of 2023.