Covid-19 trims incomes
Most households in Zimbabwe have suffered considerable reduction in incomes since the outbreak of the Covid-19 pandemic with urban areas experiencing more job losses, according to a Zimstat report.
The drop in incomes negatively impacts on domestic trade due to weak aggregate demand as some people cannot afford even basic goods and services. Industry and commerce executives recently raised concern over low sales volumes which they said was linked to decline in consumer purchasing power.
According to a report on the impact of Covid-19 on households in Zimbabwe, the disruption of normal business as a result of travel and enterprise operational restrictions this year has severely crippled family incomes.
The country imposed tight Covid-19 lockdown restrictions in March, in keeping with the rest of the world as part of efforts to curb the spread of the pandemic, which has claimed about 1,34 million lives globally and more than 200 in Zimbabwe.
“There was a considerable fall in household income since the onset of the Covid-19 pandemic as 90 percent of households that operated a non-farm business reported a drop in revenue,” reads part of the survey report.
The survey was conducted with the technical support from the World Bank.
“About 44 percent of wage workers reported a reduction or disappearance of wages. This affected urban areas in particular as the proportion of people working for a wage or operating a non-farm business was higher in urban areas than in rural areas.
“Employment dropped as one fifth of the respondents working before the Covid-19 lockdown restrictions lost their jobs. This affected both urban and rural areas and job losses were particularly severe in the retail and other service sectors.”
According to the report, the most commonly cited reason for job loss was business closure due to Covid-19 lockdown restrictions. Given that most industry and commerce operations are based in cities, the drop in household incomes was more common in urban areas where the proportion of the working class is higher when compared to rural areas.
The strain on the wider economy also resulted in a decline in assistance from family members whose incomes were equally affected. Similarly, the report indicates that remittances from Zimbabweans in the Diaspora also fell. “Two thirds of households for whom this is an income source indicated that it had dropped. These income losses are likely to exacerbate extreme poverty, which stood at 38 percent in April-May 2019,” reads the report.
Similarly, the report shows that coverage of social assistance programmes by the Government in Zimbabwe was low and had declined since the start of the Covid-19 pandemic. Only food aid had the highest coverage with a considerable number of participants indicating they benefited from emergency food relief. However, cash transfers only reached two percent of households — rural and urban combined.
“Beneficiaries of the food aid programme were mostly found in rural areas. Almost a quarter of rural respondents indicated they benefited from the food aid programme compared to one percent of the urban population,” reads the report.
The survey builds on the Poverty, Income, Consumption and Expenditure Surveys (PICES) of 2017 and 2019 and uses a sample of 1 747 households from all the country’s 10 provinces.
Despite lockdown disruption, the report states that farming, which is the country’s economic backbone, remained the main activity for 77 percent of the rural respondents with many reporting being able to conduct their normal farming activities as usual.
While Zimbabwe’s food security situation has been weakened by successive climate-change induced droughts, the survey revealed that the Covid-19 pandemic worsened the impact on households.
“Two consecutive poor rainfall seasons, rapid inflation, and cash shortages undermined people’s capability to access food.
“More than half of urban households and two thirds of rural respondents had to skip meals because of lack of resources to obtain food,” reads the report.–chronciel.cl.w
