Let’s imagine there are two ecosystems that are distinct and barely interact. Where, although you could point to some correlations, you understood that both ecosystems survived on vastly different fodder. What happens if one of those ecosystems thrived? Well, that would have little impact on the other.
That is the story of Zimbabwe and its two vastly different economies – the formal and the informal. The govt is clueless on how to deal with the informal economy which has a life of its own. Most Zimbabweans participate in the informal economy and the best the govt can do to participate is introduce a 2% tax on all transactions.
Now, in 2021, we recorded a growth in the formal economy. The World Bank says the Zim economy grew by 5.1% and this growth was good enough for a Senegalese paper to rank our finance minister in the top 5 in Africa. If only the 5% meant that much to the average Zimbabwean whose life was not in the least bit improved by the 5%.
Report confirms actual deterioration in livelihood
The UN’s World Food Programme released a report on monthly food security and the Zimbabwean situation continued to deteriorate in 2021, despite the 5% growth in the formal economy. While I wouldn’t expect a growth in the economy to have a direct and significant impact on the day-to-day lives of citizens, I would expect to see signs of an improvement.
The report says,
The food security situation in the country continued to deteriorate due to constrained household food availability and access as a result of depleted household stocks and limited livelihood options. In December, an estimated 5.9 million people reported insufficient food consumption. The estimated number of people employing ‘crisis and above’ – level food-based coping strategies increased from 9.3 million people in November to an estimated 9.6 million at the end of December 2021…WFP
That right there tells you that whatever happened in the formal economy did not translate into any tangible positive to the average person. It all goes back to there being two distinct economies in Zimbabwe. The WFP highlights this,
While the country’s economy grew by 5% in 2021 compared to a decline of 4% in 2020, this was largely driven by macro level growth in the mining and agricultural sectors and does not reflect the situation for the most vulnerable households in urban and rural settings who are still struggling to recover from the impact of COVID-19 and previous shocks experienced in the country, mainly drought and cyclonesWFP
Inflation, our mortal enemy
We talked about how it’s hard to celebrate the falling of annual inflation from 350% in December 2020 to 61% in December 2021. This is cumulative so, after general prices grew by 350% from 2019 to 2020, they then grew by a further 61% in 2021. What fell was the rate at which prices were rising, the actual prices continued to increase throughout 2021. Enough to claim the 6th highest inflation rate in the world.
This issue of rising cost of living is why the minister of finance faced criticism for celebrating being ranked in the top 5 in Africa. So, he can celebrate his 5% growth while we mourn the fact that the prices of food basket commodities increased by 67% from December 2020 levels. That’s the story right there:
- Economy grew by 5.1%
- Food basket prices grew 67%
With this in mind, I hope the minister can forgive us for our lack of enthusiasm for his vanity metrics.
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