RESEARCH firm EFE Securities says rural economies will be severely affected this year as the populace depends more on agriculture, which will be heavily impacted by El Niño during the current season.
The agricultural sector is expected to face challenges in 2024 due to the impact of El Niño, causing a decline in its gross domestic product contribution from 12,6% in 2023 to 11,6% in 2024.
“The spectre of El Niño looms large, potentially triggering a drought and jeopardising agricultural production,” EFE Securities said in its latest research titled 2023 stock market review and 2024 outlook.
“This would not only hammer food security, but also negatively impact exports and rural incomes, cascading into broader economic repercussions.
“Rural economies are expected to be severely affected as the populace depends more on agriculture, of which the erratic rains that have had poor distribution are likely to affect their output. A decline in agricultural output is likely to trigger more demand for food support programmes for the rural population and increased need for imports by the productive sector.”
The research firm said in 2024, Zimbabwe faced an unconventional challenge to fend off hunger and starvation with the United Nations’ World Food Programme estimating that at least half the population of the country faces starvation due to an impending drought in the ensuing cropping season emanating from the El Niño effects.
Rainfall patterns in the 2023-24 cropping season have already resulted in the forecast of a below normal rainfall which put growth in agriculture off-balance with more food support needed.
“There are huge expenditure headwinds ahead, the economy has naturally become highly import dependent, notable among the imported products has been fuel and more recently power due to low water levels at Kariba,” it said.
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“These two added to a coterie of other imported products, will certainly weigh on the already scarce foreign currency. The headroom to increase revenue collection appears limited due to high informalisation of the economy while the taxation route is highly constrained in the face of the already high rates faced.”
The Fincent Securities report shows that in 2022, Zimbabwe’s agricultural sector had a growth of 4,9%, propelled by increased wheat yields.
The momentum continued in 2023, with an estimated growth exceeding 6%, driven by robust performances in tobacco, wheat and maize production.
However, certain crops, notably maize and cotton, still operated below their full potential, with maize production lagging 15% behind 2018 level and cotton production 37% lower than 2018 level.
At the end of September 2023, cumulative tobacco sales stood at 296,04 million kilogrammes, up 43% on 207,10 million kg sold in 2022. The tobacco prices remained relatively flat at an average of US$3,03 per kg in 2023 from US$3,06 per kg in 2022.
As a result, the total value of tobacco at US$896,65 million surpassed the previous years’ performance by 41,45%.
Wheat output is projected to surpass 400 000 tonnes in 2023, up from 375 131 tonnes in 2022. The expected increase in output is due to an 11% increase in crop area, adequate water and increased availability of electricity to power irrigation throughout the winter season. Wheat output is projected to surpass 400 000 tonnes in 2023, up from 375 131 tonnes in 2022.
The expected increase in output is due to an 11% increase in crop area, adequate water and increased availability of electricity to power irrigation throughout the winter season.
During the third quarter of 2023, cattle slaughters from registered abattoirs stood at 93 086 head, up 2,5% from the 90 820 head in the same period in 2022.
This was also 1,5% higher than the 91 698 head slaughtered in the preceding quarter. Fresh milk production increased by 10,7% in the third quarter of 2023 to 26,01 million litres, from the 23,50 million litres produced during the same period in 2022.