HARARE – Zimbabwe is expected to experience rising income levels in the near future leading to a rise in consumer spending due to a rebound in the economy, a local equities research firm has said.
In its Consumer Sector report for 2018, IH Securities (IH) said while Zimbabwe’s GDP per capita remained well below peer sub-Sahara African countries — despite rising from $1 004 to $1 112 — consumer spending was set for a boom with spending driven by consumption in rural areas as agriculture is projected to grow 10,7 percent in 2018.
“Furthermore, rising income levels in rural areas would trickle down to urban agri-value addition businesses, and thus increasing the average customer spend in urban areas as well,” IH said.
The agriculture sector contributes about 12 to 15 percent to GDP, employing close to 30 percent of the country’s working population and is a major source of livelihood for more than 80 percent of Zimbabweans.
The 2017 year saw a spiralling of weak economic fundamentals characterised by huge imports versus low exports, subdued production capacity, low foreign direct investments, low incomes and high unemployment, a rise in multi-tier pricing which translated to inflationary pressures, a weak banking system which aided in currency premiums and a fiscal position reflecting unhealthy government spending.
Salaries and wages in Zimbabwe received regularly and irregularly were the highest sources of income in 2017 at 30 percent while income from other family members and own business were at 28 percent each, according to IH.
“The average monthly household income for August 2016 was estimated at $289,51 compared to average expenditure of $227,53 (about $63,58 is spent on food), this was below the poverty datum line of $477,12. It must however be noted that 80,6 percent of total households experienced loss of employment or income source during the period.
— The Financial Gazette