- Retail sector contribution to GDP highest across sectors
- Agriculture sector contribution diminishes to below 10%
- Manufacturing sector contribution growth aided by weak currency
Data released by ZIMSTAT reveals that the Zimbabwe economy is driven by the reselling of goods, a phenomenon that reflects underlying economic challenges in the Sub Saharan country. The country of 16 million is dominated by micro trade of consumptive goods mainly imported from the region and far east.
According to the latest data released by the country’s statistical office, ZIMSTAT, the Retail and Wholesale sector accounted for 19.24% of the country’s total GDP in 2020 a slight improvement from the prior year.
While comparable historical figures could not be ascertained, it is evident that the sector has been gradually growing its shares of contribution to GDP over the last 10 years. Zimbabwe’s economy is highly informalized, with estimates pointing towards a 65% informalization level. Most of the informal sector is concentrated in retail space across a wide spectrum of goods.
The data showed a declining Agriculture sector contribution, which came in at 7.61% down from 10.1% in 2019. A deliberate strategy by government to reposition the economy as agro based has suffered setbacks, largely due to exogenous factors such as drought, abuse of sector funding, and lack of expertise in farming.
The country imports most of its food requirements from neighbouring South Africa, which come as finished goods, expressed via retail outlets or tuckshops in suburbs and towns. It is however expected that the sector will rebound strongly this year following a good agriculture season.
According to Zimbabwe’s Second Crop and Livestock Assessment report and the US department of agriculture, the estimated maize production for 2021 stands at 2.7 million tonnes. This maize yield is estimated to be triple the 2020 harvest. The agricultural sector is projected to grow 34% this year, more than three times the 11% projected in the budget given at the end of last year.
In the 6 months period to June 2021 alone, Zimbabwe gobbled US$122 million for the importation of maize. Cumulative maize imports between 2017 and 2020 totalled US$500 million. Maize ranks among the prominent commodities featuring among the top imports which include crude soya bean oil and rice.
To reflect the significance of retail in the scheme of the country’s economic setup, sectors such as mining contributed almost 50% of retail at 10.5% of GDP. The manufacturing sector, which has been boosted by generally weakening local currency compared to regional currencies, rebounding aggregate demand, stable forex supply, and electricity supply, comes in 2nd with a contribution of 18.43%.
Capacity utilisation of industries stills ranks very low at below 50% although the figure is expected to improve to about 60% in the current year. The low utilisation of industry capacity reflects on production challenges, which are inherently intertwined with the economic status of the country.
With enhanced production, the levels of retail and wholesale contribution to GDP diminishes. Higher production levels also enhance manufacturers’ gross margins, while lowering retail prices, which ultimately benefits both the government and consumers. However, to achieve these levels of production, the industry requires retooling given years of neglect.
The retooling will enable local manufacturers to compete with regional competitors and substitute imports. This also reduces participation in the informal space which is largely in the retail sector industry absorb more personeel.
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