HARARE- A 3 day stay-away called for by the ZCTU, a workers trade union, could have potentially cost Zimbabwe $250 million in lost production, data shows. The figure could go up if the stay-away stretches to 5 days, a possibility given transport challenges and the lack of adequate transport money to commute to and from work against rising prices.
The economy could have already lost $255 million in potential GDP, over the 3 day period. This estimate loss is derived from a 2019 potential national produce of $31 billion.
In his budget presentation the minister of finance said he expects the economy’s produce to grow to $31 billion in 2019 from $24.7 billion in 2018, a growth of 26% before adjusting for inflation. A net growth of 3% was however expected after inflation which means government expects inflation to average above 20% in 2019.
As at Thursday, Harare had little traffic, with commuter omnibuses which ferry most of the workers to and from work, largely scarce, implying a further drag in the status quo of stay-away. It is now likely that normal business will only resume the following Monday, assuming political calmness and affordability of fares is addressed.
If the stay-away stretches to 5 days, the magnitude of economic loss may even widen to an estimated $426 million which would be a huge cost to the economy.
In a broadcast on Wednesday, government however said it will avail transport for all workers, to ease the transport shortages. It went on to thank volunteer operators who pledged to assist in commuting workers.
A quick survey on Thursday morning however showed that commuter capacity was at about 20% as motorists stayed away from plying their routes and although most of the businesses were open, worker attendance is estimated to be below 20%.
In terms of ZIMRA revenue which is targeted at a bullish $6.2 billion in 2019, an estimate $51.9 million was potentially lost over the 3 day strikes and the figure could go up to $85 million if the status quo remains.
Zimbabweans are demonstrating against lower wages relative to the spiking cost of living. The cost of living has grossly been worsened by a raging inflation which is now scaling towards hyperinflation.
As at November annual inflation as measured by the consumer price index was reported at 31% up from 20% in October and 5% in September. The sharp monthly surges eroded the purchasing power of salaries which barely moved. Most basics rose by about 300% in line with the parallel exchange rate.
The black-market rate was used predominantly because most of the goods traded either as finished or inputs estimated at about 65% are sourced from the region as imports.
Given that government which controls the forex allocation has been evidently overwhelmed, failing to assist companies convert their bank balances into foreign payments, the market largely gravitated towards the parallel market exchange rate.
To trigger civil unrest, government went on to announce a 250% increase in the price of fuel almost a week ago. The rational according to government was to tame back demand to meet its short supply.
The suicidal move sparked an up-rise which the authorities have made an effort to contain. It however remains to be seen how the authorities are going to deal with the economic consequences of hyperinflation which is sure to come in the next few weeks, following the fuel price hike.
Government had hoped to entice producers across key sectors with a rebate, but indications are that industry will respond with a sharp adjustment in prices in yet another value eroding move.
- Equity Axis News
