Zimbabwe poverty reaches alarming levels

ABOUT 1.5 million people living in Zimbabwe's urban centres plunged into alarming penury after their livelihoods were disrupted by the outbreak of Covid-19 and restrictions which were enforced to contain the spread of the pandemic, the World Bank has said.

Zimbabwe reported its first case of Covid-19 in March 2020 before enforcing a strict lockdown to limit the spread. Economic sectors such as tourism were some of the hardest hit while those eking out a living from the thriving informal sector faced dire straits.

This year, another lockdown was enforced at the start of the year and business organisations and labour unions say many jobs were made redundant.

Over 1 500 people have died due to Covid-19-related ailments since Zimbabwe reported its first case last year in March.

Experts say after facing an economic crisis exacerbated by the Covid-19 pandemic, Zimbabwe's economy is set to rebound by 2.9% in 2021, supported by the recovery of agriculture and due to base effects. An anticipated bumper harvest and continuation of rule-based monetary policy will stabilise food prices and improve food security.

"However, disruptions caused by the pandemic will continue to weigh on economic activity in Zimbabwe, limiting employment growth and improvements in living standards," the World Bank said.

"The pandemic and its impacts disrupted livelihoods, especially in urban areas, and added 1.3 million to the extreme poor. Estimates suggest the number of extreme poor reached 7.9 million in 2020-almost 49% of the population."

The World Bank said surveys indicate that nearly 500 000 households have at least one member who lost their job in 2020, causing many to fall into poverty and worsening the plight of already impoverished families.

"Urban households suffered most economically. Ninety percent of non-farm businesses, which skew toward urban areas, indicated that they faced a drop in revenue or did not receive any revenue at all
(ZimStat Rapid PICES Phone Survey of July 2020).  Wage earners in urban areas and the extreme poor were disproportionally affected by the pandemic, as their pay was either cut or not received at all. Rural households rely less on wage employment and non-farm businesses."

In 2020, Zimbabwe's gross domestic product (GDP) is estimated to have contracted by 8% for a second year in a row as Covid-19 halted economic recovery. Operating restrictions led to depressed manufacturing, non-mineral exports, hospitality, trade, and transport sectors.

Sales of manufacturing companies and service firms in July 2020 were about half the sales of 2019.

Supply-side shocks subsided after easing of mobility restrictions, but domestic demand was weak in an environment of triple-digit inflation, high unemployment and income losses.

"Demand for imports increased as several years of drought necessitated increased imports of maize and electricity while the pandemic presented new demands for lab equipment and medical supplies. The current account was in surplus, due to high remittances inflows and trade surplus," the World Bank said.

The government's aspiration to attain upper middle-income status by 2030 will require the authorities to strengthen governance; ensure greater transparency and accountability; and increase public financing and investments focused on critical sectors, the multilateral lender said.