A make-or-break year: Challenges for Zim in 2022

THE year 2021 has been depressing for a great number of people across the globe.

From the suffering of the majority of Zimbabweans due to continued economic challenges, insurgents in Mozambique linked to the Islamic State that have staged various attacks, Zimbabwe-South Africa migration crisis, a Taliban takeover in Afghanistan, and the arrival of hardliners in Iran to the New Cold War made global headlines. 

 Of course, the pandemic seemed untamed, which in effect not only shaped the year, but its manifest disasters also left no stone unturned.  In other words, the pandemic seeped into society like air in the atmosphere.

Despite poor spending on the social sector, Zimbabwe till now has done well as far as the pandemic is concerned. The year 2022 will be dominated by five key fault lines for Zimbabwe, nevertheless. On the economic front, Zimbabwe’s record has been one of the worst in its entire history.

 The country has absolutely failed to manage the Zimdollar, with the currency crisis a pressing issue. High price increases have shaped virtually all sectors. To cope with these hydra-headed price increases or inflation, the only strategy of the government is to hope that the global oil and key commodity prices go down.

It shows how troubled the country is. Crude oil prices gained nearly 60% in 2021 and liquefied natural gas (LNG) prices have also touched a new all-time high. The rise in global oil prices is being quickly translated to the rise in local energy prices. The rising oil prices forced the energy regulator Zera to scrap the mandatory blending of fuel.

In 2022, crude oil prices are expected to remain high, a major concern for the country that relies on imports for most of its energy demand.   Given the rising price of key commodity, oil, and other macro-economic weaknesses, Zimbabwe’s year-on-year inflation remained elevated, closing the year at 60.7%.

Of concern however, is the month-on-month inflation which stubbornly remained above the 5% mark in the last quarter of 2021. Going forward in 2022, the way the government handles affairs, it is anything but difficult to predict that inflation will prevail throughout the year in one form or the other. If that is not enough, continued depreciation of the Zimbabwean dollar is also adding to high inflationary pressures.

Premiums between the official rate and the parallel market rate have since surpassed the 60% mark. Some entities are already using the 60% rate to discount some assets that are linked to the US dollar but paid in local currency.

In short, inflation will remain and Zimbabwe may struggle to contain it this year. While more than half of Zim babweans find it hard to put food on the table, the ongoing migration crisis between Zimbabwe and South Africa is of major concern.

The South African government recently tightened its regulations and beefed up security to block undocumented Zimbabweans from flocking to the country. An estimated three million Zimbabweans are living in South Africa and only 250 000 of them granted work permits in 2009 which have been renewed over the years.

These immigrants have been supporting their families and relatives back home. However, the migration crisis implies that those families and individuals who were relying on their relatives plying their trade is South Africa will find it difficult to put food on the table. The migration crisis is a result of rising unemployment in South Africa due to years of subdued economic growth.

 The South African government decided that it will not renew the work permits for Zimbabweans after the 31 December 2021 expiry date. 2022 will be a difficult year for Zimbabweans who were relying on remittances from their colleagues in South Africa and also for those Zimbabweans whose work permits have not been renewed.

 This is bad news for a country with half its population living below the poverty line.   Another fault line for Zimbabwe emanates from its highly uncertain political environment. Politics in Zimbabwe’s history has been anything but highly uncertain.

 Year after year, political witch-hunts , intimidations, and political violence have defined the country. This year will not be any different as political parties are entering into election mode. Whatever happens, political instability will prevail or rather metastasize to another level.

 Although the government has tamed the virus to some extent, with its new variant, the deadly virus can overwhelm the country in no time. At best, Zimbabwe will grapple with the situation; at worst, like other countries such as South Africa and India, if the vaccination programme does not pick up pace and the  newer variant shows its invincibility, there can be a heavy cost.

Most probably the former will be the case. In one way or the other, the pandemic will remain here, even in milder form at least. If the 2021 gave us serious challenges, this year will not take them away. Zimbabwe has structural issues which cannot be solved at the drop of a hat. Sadly, this country has continued going down the road to self-harm.

Economic hardships and self-serving politics have further divided the nation across social lines in more of a tribal and cronyist nature. On the one hand, there is a dichotomy on each front, on the other, this balkanisation goes unaddressed with the passage of time.

 The end game, if unabated, is a disastrous total collapse of societies on tribal lines. Add to these the unending economic experiments we have had for the last four decades.

Without cost-benefit analysis, one policy or even system is supplanted with another at the whim of those in authority, which has taken the economy to a dead end from which only suicide seems inevitable. One thing is for sure: Letting things continue this way is unsustainable. It is impoverishing the majority, destroying society along tribal lines and destroying the future of the youths.

The time has come for the authorities and the elite class to cater to the needs of Zimbabwe and Zimbabweans, otherwise we will all run out of time, considering that 2023 is election year. There is fear that more populist policies may be implemented in light of the upcoming elections, that may completely destroy the little economic hope left.

Indeed 2022 is a make-or-break year for the Zimbabwean economy and its society. 

*About the writer: Tinashe Kaduwo is a researcher and economist. He writes in his personal capacity. Contact [email protected] whatsapp +263773376128