‘Zimbabwe’s inequality gap widening’

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WHILE the Zimbabwean economy grew by 6,5 percent last year as confirmed by the latest ZimStat figures, economic analysts say the growth has not cascaded down to the ordinary person.
The country’s GDP continues to increase each year, despite the adverse impacts of the Covid-19 pandemic, the debilitating economic sanctions, and global supply chain disruptions emanating from the geo-political tensions between Russia and Ukraine.
On the outlook, the African Development Bank (AfDB) has already projected the country’s economy to grow by 2,8 percent this year and 2,9 percent in 2024. The accommodation and food services industry recorded the highest growth rate with 23,7 percent, followed by the finance and insurance industry, which grew by 15,6 percent. Information and communication grew by 14,1 percent, mining and quarrying by 10,5 percent, transport and storage by 6,6 percent and agriculture grew by 6,2 percent.

In an interview this week, economic analyst Victor Bhoroma said poverty in the country, especially in the urban areas, has increased at alarming rates, with most urbanites living from hand to mouth.
“Despite the growth of the Zimbabwean economy by 6,5 percent as confirmed by ZimStats, that particular growth has not managed to permeate to the average Zimbabwean who lives in the rural areas, on farms or various growth points dotted around the country or even in urban areas.
“As we have seen, poverty in urban areas has actually increased at alarming rates. The major reason that particular growth is not permeating is that the level of inequality in the country has grown to a level where less than five percent of the population controls 80 percent of the income in the country.”
Bhoroma said that the current situation means that access to public services such as electricity, basic house care, good education, and other social services is not equally distributed.
“This means that the few that are rich in large cities consume more than 20 times the average person in Zimbabwe. Over 50 percent of Zimbabweans live in extreme poverty which means they cannot afford to spend more than US$1.20 per day.
“Because of that, the middle class in the country has virtually disappeared and also there are no savings to talk about for an average citizen.
“Those are some of the reasons why growth is not permeating to the ordinary Zimbabweans. This is because wealth is concentrated in the hands of a few,” he added.
On his part, economist Eddie Cross said Zimbabwe today is probably among the fastest-growing economies in Africa.
“The figures for last year are based on the formal sector and this is expanding more slowly than the informal economy. I suspect that we will exceed targets this year as well.”

Cross said the link between GDP growth and poverty was very complex. “You can have an economy with great wealth but extreme poverty. The Gini coefficient is meant to define this in different countries.
“South Africa has a very high reading — small wealthy elite and mass poverty. I suspect we are the same. Places like Japan and Germany have very low readings. But they are highly-developed with a strong welfare system,” he added.
Reached for comment, Tony Hawkins says the decline in real GDP in US dollar terms is more meaningful. But probably still an overestimate.
“To be fair to ZimStat, estimates of GDP in a country with very large informal sectors are even less meaningful than in modern economies.
“Sadly, however, ZimStat has damaged its reputation through its espousal of the blended inflation rate. The latest inflation data — for June put blended rate (year-on-year) inflation at 178 percent, while if you use ZimStat’s PDL data you get a year-on-year rate of 395 percent.
“The PDL measures the cost of survival and the fact is that it rose twice as fast as the manipulated blended rate, the weightings for which are not public, despite the fact that ZimStat is supposed to provide a public service.” Hawkins said that ZWL91 000 per person a month was unrealistic, insisting that if the Consumer Association is taken seriously, the rate per person per month is around
$166 000.
“In devaluing its credibility by publishing only the blended rate and not separate rates for the two currencies, ZimStat casts doubt on its professionalism. This raises all sorts of doubts about the accuracy of its estimate of real GDP growth. It’s easier to believe the current price number than the real one.” he added.
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