Population growth to strain creaky economy
ECONOMISTS have described Zimbabwe’s projected population growth as a double-edged sword likely to put a strain on the limited available resources.
This comes as the national population is projected to be around 17 million, growing by nearly four million in the last 10 years from 13 million recorded during the 2012 national census, following a census mapping exercise done last year by the Zimbabwe National Statistics Agency (ZimStat).
The ZimStat exercise projected the population to be now at 16.9 million with 8.8 million females and 8.1 males.
Now, economists have said the anticipated 30% growth in national population will put more pressure on national budgets at a time the economy is already battling energy deficits, limited foreign currency, high unemployment levels, poor social service delivery, an unsustainable external debt, inflationary pressures and declining foreign direct investment (FDI).
“The growth of the population is a double-edged sword, depending on how authorities respond to manage this reality. In terms of economic indicators such as GDP per capita, it will be now lower since we now have a bigger denominator; and that should also inform on how we should accelerate efforts to become a middle income economy by 2030.
“On the budget front, it means the nation now requires more resources in terms of food, healthcare, education, water, energy, among others,” said economist Clemence Machadu.
He said the country also risks a surge in imports as local industry might not meet the increase in demand for local goods and services.
According to the central bank, there has been an increase in production with an estimated 70% of shelf space occupied by local goods, following the return of the Reserve Bank of Zimbabwe (RBZ) auction system in 2020.
Despite this increase in production, the government still has a tall order to bring economic stability in a ballooning national population. Attention must be paid towards employment creation, education and unlocking potential presented by domestic resource mobilisation, according to Machadu.
He said: “Focus should be placed on increasing the productivity of the economy, firstly by optimising the currently unutilised capacity of the productive sectors, as well as opening new pathways for the development and growth of new initiatives that tap into our locally available resources.
“Further, there should me more investment in schools, vocational and technical training centres, housing, while prioritising agriculture production and value addition.”
Economic analyst Victor Bhoroma concurred, saying this is a chance for local industry to enhance production and create new products and services that meet the increased demand that comes with a bigger population.
Fast-moving consumer goods, technology-driven products and services such as broadband are among the top picks to appeal, especially to the young, who constitute a significant portion of the population.
However, Bhoroma highlighted that while businesses may capitalise on a bigger market size, the same becomes a headache for government currently working on a tight budget.
“This means high demand for public services, thus the budget that the country will now spread thin on a larger population, and it may mean that obviously there’s going to be a strain on public services and public goods,” he said, adding more attention would be needed towards reducing cases of extreme poverty while providing safety nets to the vulnerable as well as pensioners.
“One key issue obviously is income redistribution to marginalised in our communities, better wages for pensioners, serious investment in water and sanitation to ensure that citizens have good access to clean water, then investment into basic housing, remuneration for teachers and good road network to allow citizens access basic services with ease,” he said.
For 2022, the economy is projected to grow by 5.5%, a slowdown from 2021 growth rate of 7.4%.
Some indicators such as FDI are already painting a gloomy picture. For 2021, FDI declined to an estimated US$150 million from US$194 million recorded in 2020, which was a further decline from 2019.
“The rapid policy changes implemented in 2019 resulted in Zimbabwe losing investor confidence, which it had gained in 2018, after the election of a new government.
“The uncertain business environment characterised by a depreciating local currency and a foreign currency auction allotment backlog hinder FDI from recovering,” said stockbrokers IH Securities in their 2022 Equity Strategy Report.