A DRAMATIC rise in prices of basic goods threw more Zimbabweans into extreme levels of poverty over the past few years, a report jointly released by the national statistical agency and the World Bank has shown.
The economy, buffeted by high inflation, contracted between 2019 and 2020 at a time the country experienced one of its worst droughts in living memory.
According to an updated Zimbabwe Poverty Report which was released on Friday, the number of extremely poor people rose from 4.5 million in 2017 to 6 million during April-May 2019, but the number of poor people measured by the lower-bound poverty line rose from 8 million to 8.9 million during the same period.
Furthermore, whereas the number of extremely poor people in urban areas increased by about 327 000, it rose by 1.1 million in rural areas.
“The increase in poverty rates and the number of extremely poor and poor people during the period under review can be attributed to high inflation coupled with the contraction of the economy and a poor 2018/19 rainfall season. These negative changes in the economy are likely to have stressed the livelihoods of many Zimbabweans, thereby affecting households in urban areas more in relative terms compared to households in rural areas,” the report states.
“Simulations show that the rapid price increases that affected Zimbabwe between April-May 2019 and December 2019 may have increased extreme poverty from 38% to 52%. The study shows that increases in prices of maize, bread, and cereals had the largest impact on poverty. According to the PICES 2017 data, the share of maize-meal in total household consumption is three times higher in urban areas (1.8%) than in rural areas (0.3%). Maize-meal subsidies thus benefit urban households more than rural ones. It was also noted that within urban areas, maize-meal subsidies were more likely to benefit the middle groups than the poorest groups.”
This report presents updated poverty estimates for Zimbabwe for April-May 2019. The Zimbabwe National Statistics Agency (ZimStat) conducted the Poverty, Income, Consumption and Expenditure Survey (PICES) in 2017, and poverty estimates for that year were published in the Zimbabwe Poverty Report 2017.
“However, due to the rapid economic changes that occurred in the Zimbabwean economy from 2017 to 2019, a poverty update was needed. ZimStat achieved this by conducting a household survey, the Mini-PICES 2019, from April 15 to May 23, 2019. The survey was supported by funding from the Zimbabwe Reconstruction Fund (Zimref) and technical support from the World Bank. Sampled households were a sub-sample of the PICES 2017 households covered in February–June 2017,” the report reveals.
The general poverty rate based on the lower-bound poverty line remained high. It changed marginally for the rural population, but in urban areas it rose sharply, from 16% to 24% during the same period.
“Consumption expenditure fell for all welfare groups except the richest 10%, or decile. The welfare groups in the lower end of the income distribution (lower deciles) had the largest proportional declines in consumption expenditure. Consequently, inequality rose as the Gini index increased from 44.7 in 2017 to 50.4 in 2019. The increase in inequality was driven by a rise in inequality within urban and within rural areas rather than between urban and rural areas,” the report reads.
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