Source: Govt glossing over state of the economy – The Standard July 9, 2018
“THE economy is growing” is the new narrative from the Zanu PF government, but cash shortages continue to worsen, in spite of such claims.
BY TATIRA ZWINOIRA
The government has been hyping what it describes as the country’s positive trajectory driven by command agriculture, increase in jobs and an uptick in domestic product (GDP).
This is a programme that was first announced in August 2016 aimed at ensuring food self-sufficiency by providing support to farmers to ensure maximum maize yields.
It was introduced at the start of the 2016/17 farming season.
The programme was driven by then vice-president Emmerson Mnangagwa (now President) following the drought of the previous season.
The result of the scheme led to the harvesting of 2,1 million metric tonnes of maize against an original target of two million, which is helping to mitigate against the low yields expected this year.
“At the national level, 2018 production combined with carryover stocks from the 2017 season will bring maize supplies to above-average levels.
“However, deficits are expected later in the marketing year.
“Maize prices are projected to remain below average until August/September, and trend near the seasonal averages for the rest of the outlook period as demand increases,” American early warning system, FEWS NET said.
Zimbabwe is mainly depending on carryover maize from the 2016/17 season.
That, plus unfavourable weather conditions shows that the command agricultural programme will soon reach its expiry date unless an alternative such as hybrid maize is found.
“Early international forecasts for Southern Africa indicate increased probabilities for El Niño-induced below-average rainfall for the 2018-19 season.
“Although there is some uncertainty in this forecast, poor rains will likely affect livelihood activities from October 2018 to January 2019,” FEWS NET said.
“Assessments from various agencies, key informants, as well as FEWS NET analyses indicate that for most communal farmers the 2017-18 production levels for cereals and other crops are lower when compared to both last year and the five-year average.
“Below average to average production is reportedly being realised in other farming sectors.”
FEWS NET said arid areas in the south and west (such as most of Masvingo, Matabeleland North and South, and parts of Manicaland and Midlands provinces) and in the Mashonaland provinces had already started experiencing water shortages.
In the FEWS NET Zimbabwe Food Security Outlook for June 2018 to January 2019, the body expects crisis across most typical deficit crop-producing areas in the south, west, and extreme northern regions of the country between August 2018 and January 2019.
Zanu PF promised to create 2,2 million jobs between 2013 and 2018.
Recently, the ruling party said it had in fact created 4,5 million jobs.
National statistical agency, Zimstat, has also been reporting unemployment at 10%, a figure disputed by economists, who say the figure is above 80%.
The economy has been progressively transforming from formal to informal market and that has made it difficult to ascertain true unemployment figures.
Not helping matters is that Zimstat has been relying on economic activity as a way of explaining employment.
Economically active persons are defined as “the total number of persons available for the production of goods and services as realised in national income statistics”.
In the Zimstat Inter-Censal Demographic Survey 2017, for example, it reported that 5 611 809 people are economically active persons out of a population of 13 572 560.
“This includes paid employees, employers, unpaid family workers, own account workers (both agriculture and others) and those unemployed.
“On the other hand, homemaking, studying and being sick or too old are examples of activities of the economically inactive population.
“It is important to note that most women tend to report that they are homemakers even though they combine housework with other economically productive activities,” Zimstat said.
The definition of economically active persons makes use of the millions that have actually turned to the informal market, which includes vendors, airtime dealers or cash dealers.
But, economist, John Robertson said an informal job cannot count as employment.
“There are not jobs in the sense of not being formal. You work minute by minute to see what you should do next.
“It is just looking, finding and doing something hoping you make a few dollars doing it by selling tomatoes on the road, selling toy cars or something like that, which may look like a job but it is not,” he said.
“This kind of informal activity is not taxable and does not contribute anything to the welfare of the country, does not produce goods that can be exported and so it is a dishonest political definition that is serving dishonest politicians but not serving the nation.”
On the definition of economical active, he said: “I think the definition is misleading to make the government not that bad and so has a purely political intention.
“The main thing in being an employee is that you have an employer and a steady income and so those components are part of the definition of what an employee is.”
On average, informal workers earn between $250 and $300 a month, which is below the GDP per capita of about $800 to $900 and below an average of $500 earned by those in the formal sector.
This is less than the Consumer Council of Zimbabwe’s family basket of $591,98 as in April.
This illustrates the high level of joblessness in the country due to the below average earnings in the informal sector, GDP per capita, family basket and the non-contribution to income tax from a majority of economically active persons.
Zimbabwe Congress Trade Union secretary general, Japhet Moyo said they were in discussion with the International Labour Organisation (ILO) to change the definition of employment to reflect the reality on the ground.
“…the definition says any person, who is able to get income in seven days and what it means is this army of people like vendors with tomatoes and those roasting maize are deemed to be employed,” he said.
“As labour, we have been making a lot of presentations to ILO and currently they are working to change that because they have seen the mistake that if we use the old definition it puts every Zimbabwean as employed.
“The touts are deemed to be employed, but that is the wrong definition but government is excited because it makes them look like they are doing something.”
According to the World Bank, Zimbabwe’s GDP has grown from $15,45 billion in 2013 to over $16 billion.
Finance minister Patrick Chinamasa has often quoted figures from the World Bank as showing the country is in a positive growth trajectory, which was only being harmed by external forces such as sanctions.
This would obviously suggest that the economy would otherwise be growing.
But, the situation on the ground paints a completely different picture, one of immense poverty, low production, high unemployment, low investment and severe liquidity constraints to name a few.
However, the World Bank goes on to explain that their figures are not reliable.
“Gross domestic product, though widely tracked, may not always be the most relevant summary of aggregated economic performance for all economies, especially when production occurs at the expense of consuming capital stock.
“While GDP estimates based on the production approach are generally more reliable than estimates compiled from the income or expenditure side, different countries use different definitions, methods, and reporting standards,” World Bank said.
“World Bank staff review the quality of national accounts data and sometimes make adjustments to improve consistency with international guidelines.
“Nevertheless, significant discrepancies remain between international standards and actual practice.
“Many statistical offices, especially those in developing countries, face severe limitations in the resources, time, training, and budgets required to produce reliable and comprehensive series of national accounts statistics.”
As such, with the government’s poor keeping of official data, as illustrated by the employment figures, the extent of the country’s growth cannot fully be ascertained or whether the country is in a positive trajectory at all.