COVID-19 worsens Zim’s economic challenges

The COVID-19 pandemic has had a devastating impact on economies around the world, with estimates showing that 40 to 60 million people are expected to experience extreme poverty in 2020 as a result. The situation is particularly dire in Sub-Saharan Africa, where 23 million people are projected to be pushed into poverty. Zimbabwe, in particular, is facing significant challenges as the country grapples with the dual impact of the pandemic and pre-existing economic difficulties. Joining CNBC Africa to discuss Zimbabwe's response to COVID-19 is Batanai Matsika, the Head of Research at Morgan & Co. Matsika highlighted the emergence of what he referred to as the 'new poor' in Zimbabwe. While the country has historically struggled with poverty, especially in rural areas dependent on subsistence farming, a new trend is emerging in urban areas and informal sectors. These individuals, who were previously able to make a living through informal activities, are now facing economic hardship due to the impact of the pandemic. The existing social safety nets in Zimbabwe are not equipped to support these 'new poor,' creating a more complex challenge for the country. The economic implications of this shift are significant. With a large portion of Zimbabwe's population relying on remittances and informal activities for income, the decline in economic activity due to COVID-19 is expected to have a domino effect. The country was already struggling with economic challenges prior to the pandemic, including the impact of droughts and cyclones, which had led to contraction in the Gross Domestic Product (GDP). The projected contraction in GDP for 2020 was initially estimated at around 12%, but given the evolving situation, this figure is under review. One of the key concerns raised by Matsika is the limited testing capacity in Zimbabwe. With only 37 reported cases and 12 recoveries, there are doubts about the accuracy of these figures. The lack of widespread testing due to financial constraints within the health system raises questions about the true extent of the virus in the country. Matsika emphasized that the low numbers may not be reflective of the actual situation on the ground, and there is a possibility that the virus is more widespread than reported. In conclusion, Zimbabwe is facing a challenging road ahead as it navigates the economic fallout of COVID-19. The emergence of the 'new poor' adds a layer of complexity to the existing poverty landscape, requiring innovative solutions to support those most affected. As the country struggles with limited resources and testing capacity, the full impact of the pandemic remains uncertain. It is clear that Zimbabwe, like many other nations, will need to adapt and respond effectively to mitigate the long-term effects of the crisis.