THE year 2024 started on a bad note for Zimbabweans with basic commodity prices increasing in response to the blighting effect of tax measures introduced by Finance minister Mthuli Ncube when he presented his National Budget last year.
NHLANHLA SIBANDA
This comes at a time when the country is facing food insecurity, which is projected to worsen due to drought in the 2023/24 farming season.
The El Niño-induced drought, expected to cause economic contraction and widespread food shortages, is likely to pile misery on Zimbabweans, the bulk of whom are living from hand to mouth due to protracted hardships.
Already, in Zimbabwe, Lesotho, South Africa, Botswana, Mozambique, Eswatini and Zambia, the planting season has been delayed by two or more months, severely impacting on potential production yields, food security, economic growth and inflation, among other issues.
In November last year, Ncube introduced a new taxation regime, effecting a Corporate Tax Rate increase, while introducing Domestic Minimum Top-Up Tax, among others.
In response, basic commodity prices have skyrocketed, with a snap survey by The NewsHawks showing an uptick in peicea of basic groceries such as mealie-meal, beef, bread and cooking oil.
For instance, Pick ‘n’ Pay supermarkets has pegged a 10-kilogramme pack of mealie-meal at US$10.40 up from US$7.50 last year, while bread now costs US$1.10 up from US$1.
A kilogramme of beef has also gone up with most cuts increasing from US$5.50 to US$8.30, while a two-litre bottle of Zimgold cooking oil now costs US$4.17, up from US$3.60.
Findings from the survey have also shown that many consumers are now relying on the informal sector which is selling commodities at relatively lower prices.
In Harare’s downtown tuckshops, which are not largely affected by tax, consumers are getting lower prices. For instance, a 10kg pack of mealie-meal costs US$8, while Zimgold cooking oil is costing US$3.40.
In Mabvuku, a kilogramme of beef is slightly lower, costing US$5, US$2.90 less than the price charged by large supermarkets.
Economist Dr Prosper Chitambara said the food price hikes are likely to have an effect on disposable incomes in 2024.
“With the increase in taxes, we have already seen prices going up, which is going to affect citizens through an erosion of disposable incomes, so it is a very challenging year, especially if agricultural output slumps on account of the El Niño event,” said Chitambara.
“This year could be very challenging for ordinary citizens if there is a drought as we are in the middle of an El Niño event. It’s not yet clear, though, that the rains will be normal or below normal although the projection is that it’s going to be below normal, which is likely to affect agricultural output which also will put pressure on food prices.”
Economist Vince Musewe has said Zimbabwe is likely to experience depressed economic growth this year, forecasting an increase in food prices due to lower rainfall.
“As we all know, agriculture is one of the largest contributors to economic growth. So, if things do not go right, we will suffer [from poor] economic growth whether it’s the agriculture sector itself or factories that depend on inputs from agriculture. And that actually increases the prices of food because of food shortages, so we get food inflation because of drought,” said Musewe.
“When there is drought or unstable weather in the agricultural sector, 70% of our population living in the rural areas that is highly dependent on agriculture for food security is affected, so when there is a problem there, it has a serious impact on livelihoods as it increases hunger levels and poverty since Zimbabwe’s economy is an agrarian economy.”
