COVID-19 halts Zim inflation

COVID-19 halts Zim inflation
COVID-19 halts Zim inflation


By Prince Noble Butawo

The dark, grey Covid-19 cloud that has accounted for more than 100 000 infections in Zimbabwe has an economic silver lining if inflation figures from Zimbabwe National Statistics Agency (Zimstats)pass the credibility litmus test.

In a statement, Zimstats stated that consumer prices rose 56.37 % a plummet from the 106.6% experienced during the same time last year. An introspection will highlight the almost identical government policies in play and the major variable being the effects of Covid-19 on Zimbabwe’s Inflation.

For over a decade, the parallel market has countered every government move to combat inflation. The government assisted by scoring a spectacular own goal in 2016 through the introduction of Bond Notes which they pegged 1:1 against the US Dollar.

The botched move backfired and led to an upward inflation spiral peaking at 837.5%. On March 30, 2020, the government enforced its first lockdown, and we are now into the 15th month of lockdown.

Covid-19 has decreased informal sector business

Within these 15 months, the informal traders who mostly ply the Zimbabwe-South Africa route have not been operating fully. This led to a decrease in business. The mandatory lockdown also meant most people had to adjust to working from home.

This move lowered down the fuel uptake. To further lessen the demand for the propellant, inter-city travel was banned. The parallel market vendors who were the hub of trade were caught unaware. They could no longer flood the city as it had become hectic to enter the CBD for non-essential citizens. The concrete jungle was now dry.

Electronic money became a more viable way of transacting. Previously every balance in local currency had to be quickly turned into forex to cushion the bearer from inflation.

The low uptake of fuel, the switch to electronic transactions which fixed the cash crisis (albeit for now), the low demand for supplies that are not medicinal and the occupational challenges faced by the parallel Market vendors are the pillars that helped Zimbabwe achieve its first double-digit inflation rate in 3years.

The power mainly responsible for all this is Covid-19.

Covid-19, the unwelcome visitor killed the Snake. The man of the house will take credit and get his children’s approval. However, he will need to prove himself when the visitor is gone, and another snake enters his yard.

COVID-19 halts Zim inflation

COVID-19 halts Zim inflation