Zimbabwe faces a difficult year ahead, with challenges coming from the poor state of the economy, spiking inflation and nationwide power cuts to hit citizens hard.
The negative situation, experts say, will be compounded by the presidential and general election set to be held this coming year, which experts have said will be characterised by violence that will bring both political and economic instability.
A report by Famine Early Warning Systems Network (FEWS NET), a global provider of information on food insecurity established by US Aid to help plan for humanitarian crises, said high food prices and a rampant parallel market will increase hunger for households in 2023.
The report, released on December 23, warned of more price hikes ahead for consumers.
“Following relative macroeconomic stability over the last few months, prices are likely to continue increasing into early 2023, further reducing the market access of poor households to basic food and other commodities,” the report stated.
“Parallel market exchange rates increased by nearly 15% in December from November, trading between 850-950 ZWL per US dollar, likely due to increasing demand for the ZWL and increased foreign currency inflows as the festive season begins.
“Additionally, widespread and prolonged national power cuts are negatively affecting most sectors of the economy, increasing the cost of production and reducing engagement in income generating activities, thereby limiting household purchasing power and income,” reads part of the report.
Zimbabwe has a thriving parallel market. The official exchange rate now stands at ZW$671 to the US dollar, but on the parallel market, it trades at ZW$950 to the US currency. Most goods and service are priced using the parallel market rate, making them unaffordable for many Zimbabweans.
FEWS NET has now labelled almost all of southern and central Zimbabwe as being in “crisis” as far as food security is concerned, with some parts of the north of the country labelled “stressed”.
Across the country, poorer households are increasingly engaging in agricultural and off-farm labour activities with the start of the agricultural season. However, labour rates remain below normal, especially in deficit–producing areas and other communal farming areas, due to limited liquidity by better–off households to pay in cash or in–kind,” the report states.
“Poorer households are increasing their reliance on bartering for food, selling household assets and livestock, migrating for labour, relying on social networks for support, and petty trade to earn income for food purchases to cope with below-average wage rates and income.”
Gift Mugano, visiting professor of economics from Durban University of Technology, told Sunday Times that Zimbabwe needed to make significant changes to revive the economy.
“2023 is gloomy because we are carrying spill over challenges from 2022, particularly the issue of excessive money supply, high inflation levels, low confidence levels and negative perception about the politics,” he said.
“I expect 2023 to be a very difficult year if we don’t make a U-turn on what we are doing. The government needs to dismantle command economics – this whole mantra of presidential programmes, presidential input supply – it’s a good thing for fostering food security but comes with costs.
“We need to see the government reverse downwards the 200% interest rate, it’s too high – its killing businesses. Zimbabwe needs investment-friendly policies, we must remove excessive taxes which are on businesses, and reduce interest rates.
“We must deal with corruption – because if we allow people to continue to be corrupt, Zimbabwe will have a casino economy. But naturally you get a sense that the government is not listening,” Mugano said.
The rising cost of living, inflation at 255% as of November 2022, and nationwide power cuts have hit even middle-class Zimbabweans hard. The government, which pays salaries in Zimbabwe dollars, is the country's biggest employer but salaries are quickly eroded by inflation.
A married couple who both have civil servant jobs, and who spoke to the Sunday Times on condition of anonymity, said they struggled to meet basic needs.
The government is the country's biggest employer but salaries are quickly eroded by inflation
“We can barely make ends meet, we are struggling to make rent and buy food, despite both us working. It’s hard to imagine what the new year will bring. Already we had to cut back on spending.
"We have children, we need to pay school fees, pay the bills and we also have to deal with the power cuts, we can’t afford to buy a solar system or a generator,” the woman said.
Zimbabwe’s general elections are routinely marred with varying degrees of violence and as 2023 approaches there are growing fears that the country will once again plunge into violence.
Prosper Chitambara, a development economist and policy adviser, told the Sunday Times that the general election will bring much uncertainty.
“For next year the biggest downside risk is the general election. Normally in an election year, public spending increases quite significantly. And in most cases, public spending is financed through the creation of money. It then has a destabilising effect on the economy through generating inflation pressures in the economy,” he said.
“Also, politically, elections are associated with violence. The risk of political instability in the months leading to the elections and after the elections will have an effect on the economy.
“The power outages are expected to continue until the second quarter of next year. Again, this will continue to affect industry and the economy.
“In the new year, Zimbabwe faces a lot of uncertainties, but the biggest risk is the political on account of the upcoming elections,” Chitambara said.
According to the Zimbabwe Electoral Commission (ZEC), 43% of voters in the 2018 poll that brought President Emmerson Mnangagwa to power were young voters, but unemployment and the crippling economic crisis have left youths feeling despondent.
Tafadzwa Chakuta, 28, earns US $3 per day washing cars in Harare.
“I am a registered voter but l am not sure my vote will make a difference or change my life. I am still struggling to find a decent job – struggling to eat,” he said.
“It’s daunting to think about the new year, already l am going hungry. I don’t have a regular source of income; car washing is slow – not many people come to have their cars washed because for everyone money is tight. Will it get any better in 2023? l doubt it. I feel stuck.”
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