News / Local
'Zimbabwe food security remains low,' says USAid
14 Sep 2021 at 06:13hrs | Views
THE United States Agency for International Development (USAid) food security arm, Famine Early Warning Systems Network (Fewsnet) says household food stocks are beginning to run low as the surging cost of living continues to ravage personal incomes.
Despite a significant drop in the annual inflation rate down to 50% in August, the cost of living continues to go up and is significantly above poor households' income in urban and rural areas.
This has again called into question how macroeconomic data is collected by official sources such as Treasury and Zimbabwe National Statistics Agency (ZimStat).
Consumer bodies report that the cost of living is now over $40 000 per month while most people are earning between $18 000 and $26 000.
"With the progression of the 2021-22 consumption season, households' own-produced food stocks are beginning to run low. Some poor households have already exhausted their stocks, especially in the south where production was negatively affected by above-average rainfall during the 2020/21 agricultural season," Fewsnet said in its latest food security report.
"Macroeconomic challenges and constrained purchasing power continue to negatively affect livelihoods and food access, especially among poor urban and rural households. Although official annual inflation continues to decline, the cost of living remains high and continues to increase beyond what poor households can afford. ZimStat reported annual inflation at 50% in August, down from 56% in July and 107% in June."
"However, monthly inflation increased to 4,2% in August from 2,6% in July. Also, according to ZimStat, the cost of living increased by 3,1% and 3,7% from July to August, as measured by both the cost of minimum food requirements and the total cost of food and non-food needs to stay above the poverty line."
The reason behind the high cost of living is the growing disparity between the official and parallel forex rates with the former standing at US$1:$86,21 and the latter US$1:$160.
Since the parallel forex rate is viewed as the true exchange between the greenback and the Zimbabwe dollar, businesses are pegging their goods and services against it to preserve value.
Some government departments and local authorities have been raising prices for goods and services to match the parallel forex rate.
"Despite the government directive for goods and services charged in Zimbawean dollar to be pegged at prevailing official auction rates, most businesses are applying parallel market exchange rates, driving high and increasing prices in Zimbabwean dollar terms. With the official exchange rate around US$1:$85, parallel market rates are over 50% higher," Fewsnet said.
"In addition, up to 30% fees are imposed on non-cash Zimdollar mobile money and electronic transfers. High fuel and transportation costs and on-going transportation challenges due to COVID-19-related movement restrictions continue to negatively impact livelihoods in both rural and urban areas."
COVID-19 regulations have also limited people's ability to eke out a living.
"Poor households reliant on informal sector activities, including cross-border trade, petty trade, remittances, small-scale industries, and informal transport services, are experiencing the biggest decline in income and access to food," Fewsnet said.
However, in areas where crop production was impacted by heavy rains, these places will experience stressed outcomes beginning next month with the onset of the lean season.
"Most deficit areas are expected to experience stressed outcomes through September. Crisis outcomes are expected to emerge in these deficit areas starting in October as households' own produced stocks decline and they are forced to purchase on the open market with reduced purchasing power from poor incomes," Fewsnet said.
"Urban areas are expected to remain stressed throughout the outlook period due to low income among poor households and above-average prices."
Despite the national poverty rate being at nearly 50%, and growing, government continues to claim that the economy is rebounding and revised its initial growth projection by 0,4 percentage points to 7,8% by year end.
Despite a significant drop in the annual inflation rate down to 50% in August, the cost of living continues to go up and is significantly above poor households' income in urban and rural areas.
This has again called into question how macroeconomic data is collected by official sources such as Treasury and Zimbabwe National Statistics Agency (ZimStat).
Consumer bodies report that the cost of living is now over $40 000 per month while most people are earning between $18 000 and $26 000.
"With the progression of the 2021-22 consumption season, households' own-produced food stocks are beginning to run low. Some poor households have already exhausted their stocks, especially in the south where production was negatively affected by above-average rainfall during the 2020/21 agricultural season," Fewsnet said in its latest food security report.
"Macroeconomic challenges and constrained purchasing power continue to negatively affect livelihoods and food access, especially among poor urban and rural households. Although official annual inflation continues to decline, the cost of living remains high and continues to increase beyond what poor households can afford. ZimStat reported annual inflation at 50% in August, down from 56% in July and 107% in June."
"However, monthly inflation increased to 4,2% in August from 2,6% in July. Also, according to ZimStat, the cost of living increased by 3,1% and 3,7% from July to August, as measured by both the cost of minimum food requirements and the total cost of food and non-food needs to stay above the poverty line."
The reason behind the high cost of living is the growing disparity between the official and parallel forex rates with the former standing at US$1:$86,21 and the latter US$1:$160.
Since the parallel forex rate is viewed as the true exchange between the greenback and the Zimbabwe dollar, businesses are pegging their goods and services against it to preserve value.
Some government departments and local authorities have been raising prices for goods and services to match the parallel forex rate.
"Despite the government directive for goods and services charged in Zimbawean dollar to be pegged at prevailing official auction rates, most businesses are applying parallel market exchange rates, driving high and increasing prices in Zimbabwean dollar terms. With the official exchange rate around US$1:$85, parallel market rates are over 50% higher," Fewsnet said.
"In addition, up to 30% fees are imposed on non-cash Zimdollar mobile money and electronic transfers. High fuel and transportation costs and on-going transportation challenges due to COVID-19-related movement restrictions continue to negatively impact livelihoods in both rural and urban areas."
COVID-19 regulations have also limited people's ability to eke out a living.
"Poor households reliant on informal sector activities, including cross-border trade, petty trade, remittances, small-scale industries, and informal transport services, are experiencing the biggest decline in income and access to food," Fewsnet said.
However, in areas where crop production was impacted by heavy rains, these places will experience stressed outcomes beginning next month with the onset of the lean season.
"Most deficit areas are expected to experience stressed outcomes through September. Crisis outcomes are expected to emerge in these deficit areas starting in October as households' own produced stocks decline and they are forced to purchase on the open market with reduced purchasing power from poor incomes," Fewsnet said.
"Urban areas are expected to remain stressed throughout the outlook period due to low income among poor households and above-average prices."
Despite the national poverty rate being at nearly 50%, and growing, government continues to claim that the economy is rebounding and revised its initial growth projection by 0,4 percentage points to 7,8% by year end.
Source - NewsDay Zimbabwe
