Workers bear brunt of economic instability

Workers in Zimbabwe have bemoaned rising cost of living as the local currency’s value continues on a free fall.

Zimbabwe has been witnessing a wave of rising inflation and sharp currency depreciation since the beginning of 2024.

Inflation has remained elevated in the economy, despite growing efforts by the government to implement remedying strategies.

Reserve Bank of Zimbabwe (RBZ) released data shows that the local currency has been on a downhill trend since the beginning of the year.

As of yesterday (21 March 2024), the Zimbabwe dollar traded at $ 19,332 against US$1 while the parallel market rate (PMR) ranged up to prices over $ 23,000 for the greenback.

The official exchange rate ended 2023 at $6 104 to US$1 but immediately fell to close January 2024 at US$10, 152 to the greenback, while the February official exchange rate ended the month at $14 912 per dollar.

Of concern is the local workforce, where a significant number is still earning the Zimbabwe dollar despite the currency being subject to immense devaluation.

Zimbabweans have grown to have little faith in the local currency, stemming from the 2008 and 2019 scenarios, where savings and incomes were seriously eroded after the currency took a serious nosedive.

Lack of confidence in the Zimbabwean dollar has long been considered one of the major underlying sources of turbulence, which has characterised the local economy in the last five years.

As it stands, businesses and individuals continue to face difficulties in planning and processing transactions because of exchange rate movements, particularly on the parallel market. Analysts say financial sector stability should be ranked high on the priority list and the government should act strongly to curb this menace which might continue to show its ugly head in the economy.

They also insist that the government should work strongly on resuscitating the value of local currency which has been a victim of recurrent inflation attacks.

According to Zimbabwe National Statistics Agency (ZimStat), the month on month inflation rate stood at 6,6 percent in January followed by 5,4 percent in February 2024.

Year-on-year inflation rate for February 2024 as measured by the all-items Consumer Price Index (CPI) stood at 47,6 percent.

The food poverty line (FPL) for one person in February 2024 was $432 454, 90 this is outside the range of other basic needs which include transport costs, utility payments and health bills.

The FPL shows the amount of money an individual needed to buy food in February and it represented an increase of 178,4 percent over the January 2024 figure of $155 360,39.

The cost of living reflects a dire situation experienced by the local population as their earnings can barely afford such, especially for individuals with big families.

“Salaries and allowances in RTGS have been seriously depreciating and this has had a huge impact on the local workforce. If this continues it will have a serious effect on living standards for people in employment and aggregate demand for local businesses will fall.

“For Government workers, salaries and allowances for RTGS have been stagnant for about seven months.

“During that period, the local currency has depreciated very considerably. The money is now worth one-third of what it was worth at the beginning of that period,” said Eddie Cross, a local economist.

National Consumer Rights Association (NACORA) spokesperson, Effie Ncube, said the economic environment was putting ordinary Zimbabweans in a tight spot, leaving them vulnerable to poverty.

“Majority of people in Zimbabwe earn the Zimbabwean dollar and the skyrocketing exchange rates are affecting them, this is worsened by businesses that are only accepting the USD which is making life tough for them,” said Ncube.

The Zimbabwe dollar which was re-introduced by the RBZ in 2019 is also facing widespread market rejection.

The local unit is incessantly plummeting against the USD in both foreign exchange markets.

According to Equity Axis, a research entity, people and the business community alike have lost confidence in the Zimbabwe dollar.

“The Zimbabwe dollar continues to depreciate with record declines against the US dollar as it continues failing to keep value and to be a trusted currency. Zimbabwe dollar is suffering from confidence deficit, the public no longer has confidence in both the financial institutions and the financial gaffers.

“As for now, the public awaits the structured currency which the Finance Ministry hinted about as a way of restoring financial sanity,” said Equity Axis.-ebusinessweekly