THERE has been so much talk about resolving the country’s protracted economic crisis. Yet on the ground, the situation is far from improving. In the past year alone, interest rates have been hiked, tight monetary policies have been pursued to arrest rampaging inflation and control money supply growth.
Despite these efforts, the rate of suffering for the most vulnerable has increased, with many struggling to buy food and other basics. To gauge how bad Zimbabwe’s crisis has turned, one only needs to watch the daily hassles that those trying to make ends meet by selling wares on the streets have to go through to find transport. Deepening drug shortages in health centres demonstrates just how promises by authorities to address the most basic needs have flopped.
In schools, deepening shortages of books and other learning materials have become endemic. The majority of children are only attending lessons for the sake of it — there is not much that they are benefiting, especially with underpaid teachers on perpetual go slow.
While there has been a drumbeat of optimistic statements from government, which says growth would be around 3,8% this year, figures released by various organisations and regulators in the past week revealed a completely different picture.
Economic experts are already warning of a difficult year ahead. According to a report by FBC Securities, the Zimbabwe dollar lost almost 60% of its value during the first quarter of this year. This is a worrying development, given the fact that last year the currency depreciated by the about 70%.
The Confederation of Zimbabwe Industries’ respected manufacturing sector survey noted that there was no growth in the key sector last year. Capacity utilisation dropped to 56,1% compared to 56,3% during the same period in 2021. Signs of a difficult year ahead are already showing, but there is little movement from government to tackle the headwinds. Even for those still in formal employment, there is little guarantee that many of them will keep their jobs this year.
Companies are grappling with reduced spending as rioting inflation triggers price hikes and currency volatility while spending power is waning. In addition, a power crisis that worsened at the end of last year is threatening industrial production. Firms are spending production time grounded due to lack of power. Those still producing are running on expensive generators, which explain why prices have been rising beyond the reach of many. Instead of rising up to the challenges, what Zimbabwe has seen is the multiplication of taxes, fees and policies that complicate the way business operate.
Zimbabwe’s authorities believe they can solve this crisis by making up for lost revenue through overtaxing companies and hiking other fees. But the truth is the best way to deal with Zimbabwe’s crisis will be addressing productivity problems to improve exports. The economy requires firm commitments by authorities to halt currency battering for companies to plan easily. Unless this is tackled, Zimbabweans can forget prospects of seeing a stable economy for many years to come.
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