An important highlight is that the re-introduction of the local currency unit was premature given that certain pre-requisite conditions such as (i) single-digit inflation; (ii) fiscal consolidation (eradication of budget deficits and national debt); (iii) current account surplus; (iv) stable exchange rates; and (v) adequate foreign currency reserves were not met.
Waning confidence in the local unit will also trigger full dollarisation (above 90%) as the general population will regard monetary amounts not in terms of the local currency but in terms of a more stable foreign currency.
There is also evidence that most prices are being quoted in US dollars while most households and individuals prefer to keep wealth in non-monetary assets (real estate and commodities) or in a relatively stable foreign currency.
Poverty, vulnerability remain high
According to World Bank, the economic rebound in Zimbabwe following the Covid-19 pandemic has helped to bring down the levels of poverty and food insecurity. On the back of economic recovery and record maize harvests in the 2020/21 agricultural season, the extreme poverty rate fell by 6 percentage points to 43% in 2021 and to 42% in 2022.
The food insecurity rates also dropped from their highs of 2020 and early 2021. Nevertheless, poverty, vulnerability, and food insecurity rates remain worryingly high.
Expected increase in the cost of living
The cost of living in ZWL terms is expected to continue to increase throughout the outlook period, mainly driven by rising official and parallel market exchange rates. USD price increases for some goods and services are also likely, driven partly by anticipated production and transport cost increases.
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According to the Consumer Council of Zimbabwe (CCZ), the cost of the food basket for a family of six increased to ZWL3.6 million in January 2024, with retailers now charging some goods exclusively in USD owing to the depreciating Zimdollar.
Informal retail for the poor
Due to relatively lower prices than formal retail shops, the informal retail sector will likely remain the preferred source of basic food and other commodities, especially among poor households.
It is expected that panic buying of staple grain will trigger significantly above-normal price spikes through the next harvests. Further, the anticipated El Niño-induced below-normal rainfall from January through March 2024 is expected to negatively impact seasonal agricultural labour opportunities, particularly in semi-arid areas.
Poor households, especially in southern and western areas, are likely to increase their reliance on remittances from family members in the diaspora, but the high cost of living will likely impact the amount received.
Some households will increasingly seek to earn income from petty trade and informal mining to earn income for food purchases and rely on humanitarian assistance.
Technological environment
In today’s everchanging environment that is marked by disruption, the question of corporate survival has become top of mind as companies grapple with how to move forward.
According to a report by Accenture Research titled; “Breakthrough disruption, embrace the power of the wise pivot”, the way we live today is driven by new innovations that we scarcely could have dreamt of a mere generation ago.
Consumers are now demanding more personalised and flexible services while business leaders are left to navigate an everchanging landscape.
E- commerce platforms
The retail sector is an interesting example of an industry that is undergoing different waves of disruption. Retailers in Zimbabwe have been embracing technology and making use of e-commerce platforms such as WhatsApp Business. Simbisa Brands is an interesting case-study of a business that has been ahead of the digitisation curve through its Dial-a-Delivery App. Simbisa Brands is a Quick Service Restaurants (QSR) group which runs Chicken Inn, Pizza Inn, Bakers Inn and Creamy Inn, Nando’s.
- Matsika is the managing partner at Mark & Associates Consulting Group and founder of piggybankadvisor.com. — +263 78 358 4745 or [email protected] / batanai@ piggybankadvisor.com.
