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Zimbabwe's economy set to contract after battering by Covid-19

16 July 2020 - 17:52 By Lenin Ndebele
Zimbabwe's finance minister Mthuli Ncube presented his mid-term fiscal policy on Thursday.
Zimbabwe's finance minister Mthuli Ncube presented his mid-term fiscal policy on Thursday.
Image: Philimon Bulawayo/Reuters

Tourism, agriculture, mining, manufacturing and education in Zimbabwe have been hit hard by Covid-19. The economy is set for a 4.5% contraction from an initial projected 3% growth, finance minister Prof Mthuli Ncube said on Thursday.

Presenting his mid-term fiscal policy, Ncube said the pandemic has led to an 80% drop in international air travel, resulting in a 60% reduction in tourism arrivals. There was a 90% reduction in hotel occupancy. 

“It’s a total shutdown,” said Ncube.

In agriculture the problem is a combination of drought and constrained funding. According to the UN fact sheet, more than 7-million Zimbabweans (almost half the population) are food insecure. Only 10% of those got government support in the past six months.

Ncube said 760,000 food-insecure households received government assistance during the first half of the year in rural and urban areas.

At the beginning of the lockdown in March, lasting 21 days before review, the mining sector experienced reduced output and the global Covid-19 effect affected commodity prices.

Ncube said despite an increase in demand for health workers and the manufacturing of PPE, industry suffered through reduced working hours, reduced wages and retrenchments. 

Independent economists say annual inflation stands at 1,113% while the government places it at 737.3%. With growing disgruntlement in the civil service, Ncube effectively increased non-taxable income from ZW$2,000 (R500) to ZW$5,000 (R1,250) with effect from August 1.

Former finance minister Tendai Biti, the vice-president of the MDC Alliance, said Ncube’s review was “knee-jerk and involuntary”. He called it chaotic. “There’s a total loss of confidence, zero productivity, hyperinflation, no forex, the stock exchange is shut, workers are in turmoil and markets are jittery.”

Since coming into power through a military coup in November 2017 and winning a disputed election in July 2018, President Emmerson Mnangagwa has struggled to control the economy despite hiring a political rank outsider as finance minister. Ncube told Zanu-PF’s supreme decision-making body last month that he was not a magician.

In a TV interview on Thursday with Deutsche Welle, foreign affairs minister Sibusiso Moyo said Mnangagwa inherited an economy battered by sanctions and corruption.