Govt urged to address rising cost of living to sus...

Govt urged to address rising cost of living to sustain national competitiveness

Audrey Galawu

The World Economic Forum has pointed out the rising cost of living as one of the top ten global risks for 2024 over the next two years, including for Zimbabwe.

Zimbabwe is facing challenges of high inflation and exchange rate volatility, which has moved from US$1: ZWL$1 000 in January 2023 to US$1: ZWL$15 000 in February 2024.

The government has projected annual inflation to end at slightly above 10% owing to tight monetary and fiscal policies.

According to the latest Zimbabwe National Statistics Agency, the Food Poverty Line went up 178.4% in February, to ZWL$432 454.90.

The Total Consumption Poverty Line for one person, also went up 177.8%, to ZWL$552 745.80 in February 2024.

According to the WEF, economic uncertainty will weigh heavily on enterprises and if interest rates remain relatively high for longer, “small- and medium sized enterprises and heavily indebted countries will be particularly exposed to debt distress”.

In an overview of the Global Risk Report, the National Competitiveness Commission outlined that the current economic challenges are a threat to the country’s competitiveness locally and regionally.

“With the recent macroeconomic developments, it is very unlikely that the country will end the year 2024 on single digit inflation level, unless drastic measures are undertaken to abate the deteriorating macroeconomic environment of the major downside risks to macroeconomic stability, which is a critical competitiveness pillar.

“With the rising of global prices for food, electricity and other basic necessities, Zimbabwe is unlikely to be spared, and these commodities are expected to be beyond the reach of many.

“These movements pose challenges for productivity and competitiveness by increasing operating costs for businesses, dampening consumer spending, contributing to inflationary pressures, exacerbating regional disparities, and influencing policy responses, which leads to business uncertainty, thereby negatively affecting competitiveness,” the NCC said.

The WEF recommended that there be policies aimed at increasing productivity through investments in infrastructure, skills development, and innovation to help mitigate the effects of rising living costs on the market’s competitiveness.

“High inflationary environment is one Zimbabwe needs to increase funding for disaster management and also environmental awareness campaigns to mitigate effects of climate change so that the country avoids being food insecure and the economy will remain sustainable.

“Government, with support from the private sector and Development Partners, needs to address the challenges posed by the rising cost of living and maintain national competitiveness. These strategies may include targeted interventions to improve housing affordability, healthcare access, and education quality,” the WEF said.