THE wholesale and retail trade sector is now Zimbabwe’s major employing industry, beating the agricultural sector, which for a long time was the largest employer in the economy.
The wholesale sector employs 26.9% of the employed population and was the largest contributor to gross domestic product (GDP). The sector’s contribution to GDP went up to 23.6% in 2021 from 20.9% in 2020.
According to the Zimbabwe National Statistics Agency, agriculture is no longer the biggest employer, it accounts for 19.30% employment.
Speaking to The NewsHawks, economist Prosper Chitambara said the structural changes in the economy like de-industrialisation weakened the agricultural and manufacturing sectors.
“We have also seen challenges in the agricultural sector, there has been ranging changes that have taken place within our economy which have resulted in trade, a wholesale and retail trade, as well as sale and repair of motor vehicles and motorcycles actually dominating in terms of contributing to employment.
“The economy is now largely dominated by buying and selling, which is what trade is all about. I think we need to support our agricultural sector, especially because that is also important for revamping the manufacturing sector,” Chitambara said.
Meanwhile, the manufacturing sector, which should be the driving force in economic transformation towards Zimbabwe’s national vision of attaining an upper middle-income economy by 2030, lagged behind, only accounting for 8% of total employment.
From the 2021 economic data published by ZimStat, the GDP contribution from agriculture dropped to about 8.8% for 2021, while the manufacturing sector accounted for 12.4% in GDP.
In their Business Insights publication, the Confederation of Zimbabwe Industries (CZI) said the trend showed that the wholesale and retail sectors were growing largely through imported rather than locally manufactured products.
The CZI added that high proportion of low-income earners suppressed demand as consumer spending mainly depended on disposable income.
Depressed salaries result in low disposable income, which leads to low demand for goods and services.
Sales volumes of OK Zimbabwe decreased by 11.33% for the third quarter (October-December) and 9.37% for the nine months to December 2022 compared to the prior year driven by declining consumer spending power.
In the last three months of 2022, 23% of the employed population in Zimbabwe were earning less than ZWL$20 000 of the employed population earned more than ZWL$150 000 (USD165); converted to US dollars using the parallel market rate (ZWL$910: US$1) of December 2022.
“This level of depressed salaries adversely affects consumers’ purchasing power, which in turn affects sales. To boost demand and spur economic growth, salaries should reasonably increase,” the CZI said.
As a result, the CZI said diaspora remittances are driving demand, as salaries remain subdued for the majority of the population.