Inflation wreaking havoc unabated

THE latest blended inflation statistics released by the Zimbabwe National Statistics Agency (ZimStat) show prices mounting by 175,8% between June 2022 and June 2023, about 89 percentage points up from the 86,5% increase realised between May 2022 and May 2023.

Blended inflation was introduced in February this year and it measures combined price changes of goods and services in United States dollars and Zimdollars.

In monthly terms (May 2023-June 2023), blended prices have increased by 74,5% compared to an increase of 15,7% registered in the previous month (April 2023-May 2023).

Although the blended inflation rate spiked significantly in June 2023, these blended metrics are close to meaningless as they fail to give a true reflection of pricing dynamics, especially for Zimdollar earners.

For instance, in June 2023, the local currency suffered serious speculative attacks (sudden and massive selling of a currency to destabilise its value), forcing Zimdollar prices to triple and quadruple in some cases.

This, therefore, shows that the blended monthly inflation rate of 74,5% presented by authorities is surely misleading as it masks the actual inflation tax faced by those largely earning in Zimdollars, particularly civil servants.

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Some independent inflation estimates are showing Zimdollar inflation above the 1 200% mark in June.

Largely fuelling hyperinflation in June 2023 was the massive Zimdollar decline against the US dollar as the market responded to excess liquidity growth that was emanating from Reserve Bank of Zimbabwe quasi-fiscal operations.

Also, escalating Zimdollar liquidity on the market was spiking fiscal spending as the nation gears for a harmonised election slated for August 2023.

As of June 26, 2023, the Zimdollar has erased 62% of its value against the greenback on the interbank market sliding from US$1:$2 577,06 end of May 2023 to US$1:$6 862,28.

On the parallel market, the local unit of exchange also declined excessively as it lost 54% of its average value from US$1:$3 600 realised at the end of May 2023.

Apart from the exchange rate pass-through to inflation, price instability in June was also partly driven by negative perceptions, adverse expectations of future inflation, structural rigidities like corruption and increased load-shedding, spillover effects from the Russia-Ukraine war and increased money velocity exerting upward pressure on prices.

Government has since instituted many policy measures to tame ongoing economic instability. In response to these measures, the rate of Zimdollar exchange rate depreciation seems to have started to subside thereby reducing parallel market premiums within conventional thresholds.

If government does not waver and adhere to monetary and fiscal discipline coupled with full implementation of political and economic reforms to increase market efficiency and innovation, curb corruption and impunity, eliminate illicit financial flows, and restore the rule of law as well as respect for individual rights and freedoms, durable macroeconomic stability will be attained.

But, be that as it may, it remains to be seen if there will be any meaningful reform(s) that will be fully implemented two months from an election.

In developing nations like Zimbabwe, the major aspect of elections is access to public resources through an electoral victory hence the reason they are often fraught with competition and conflict. - Zimbabwe Coalition on Debt and Development

MOST households across the southern African region are engaging in harvesting, which is improving household food access and diet diversity.

Staple food supplies have particularly improved in parts of the region where rainfall performance was average to above average, including surplus-producing areas of Lesotho, northern parts of Zimbabwe, central and northern Malawi, northern and central Madagascar and northern Mozambique.

In these areas, households are experiencing Minimal (IPC Phase 1) outcomes.

However, in southern and central Zimbabwe and southern Mozambique, dry spells in January and February resulted in significant production losses and most poor households are likely Stressed (IPC Phase 2) outcomes.

However, Crisis (IPC Phase 3) outcomes persist in cyclone Freddy-affected areas of Mozambique and Malawi, the grand south of Madagascar, and conflict-affected areas of Mozambique and the Democratic Republic of Congo (DRC).

From June to September, there will likely be an increase in the number of households experiencing Stressed (IPC Phase 2) and Crisis (IPC Phase 3) outcomes as household food stocks decline through the dry season.

Staple food prices have declined in most markets following increased market supplies from the main harvest, improving household access to food.

However, prices remain higher than last year and the five-year average.

In areas with below average production, prices are likely to rise in August and September, earlier than normal, as more households increase their reliance on market purchases and their food stocks decline.

In Zimbabwe and DRC, local currency instability and depreciation are driving commodity price increases in local currencies, negatively impacting the ability of poor households to access food.

Poor households in areas with below-average harvests are earning additional incomes for staple food purchases by increasing participation in casual labour activities in neighbouring surplus areas, including harvesting, cutting and selling grass for thatching, brick moulding, and petty trading.

In areas with an effective second season, like Zimbabwe, Malawi and Lesotho, households also earn additional income from agricultural labour activities, including cultivating and planting short-cycle maize, winter wheat, sweet potatoes and vegetables. - Famine Early Warning System Network

AGRI-TECH’S contribution to agribusiness in Africa is projected to help solve the food security crisis.

The African Continental Free Trade Area (AfCFTA) will boost Africa’s agri-business.

A recent World Bank report showed that 73 million people in eastern and southern Africa face acute food insecurity.

Increased investments in agri-business will see agriculture technology (agri-tech) in Africa record massive growth.

The food security crisis has ravaged many African countries. Consequently, the situation has attracted investor interest.

This has instigated a digital revolution promoting the agri-tech start-up ecosystem.

Agri-tech start-ups remain instrumental in developing the agribusiness sector.

The sector wields enormous economic potential for the continent. Fundraising by agri-tech start-ups in Africa has been growing exponentially over the years.

The 2023 edition of the Pitch AgriHack launched by Africa’s Food Systems Forum, Heifer International, and Generation Africa will run until end of this month.

The competition aims to promote Agri-tech innovation and sustainable agricultural development in Africa. Furthermore, it is targeted at inspiring and empowering the youth in agri-tech. The overall aim is to inspire a new generation of entrepreneurs.

These will, in turn, revolutionise the agricultural landscape, empower smallholder farmers across the continent, and tackle the food security crisis in Africa.

The organisers seek to foster innovation, create jobs and enhance Africa’s food security.

Moreover, the “Grow Impact Accelerator Programme” is also ongoing. Backed by AgFunder, the programme seeks to drive transformation by supporting agri-tech and food-tech start-ups.

The 8th Africa Agribusiness and Science Week in Durban, South Africa, underscored the need for increased financing to the sector.

The event happens every three years. The last one happened in Kigali, Rwanda, in 2016.

The Kigali event explored the theme of Linking Agri-business with Science and Innovation for Sustainable Agriculture and Food Systems.

We must combine the best science, technology, and innovations to drive a more productive, efficient, and competitive agricultural system. Africa’s food systems have the potential to unleash US$1 trillion in value over the next seven years.

Agri-tech in Africa is the fuel driving agribusiness on the continent. AfCFTA will boost Africa’s agri-business. The trade pact will oversee US$6,7 trillion in consumer and business spending by 2030.

According to the World Economic Forum’s Insight Report, AfCFTA has ushered in a new era for global business and investment in Africa.

Digital technology and climate science will boost Africa’s search for resilient food system transformation solutions.

Harnessing the power of technology and innovation will boost food production in Africa and help in poverty alleviation for economic growth. - Exchange