Tawanda Musarurwa

With the coronavirus pandemic seriously disrupting markets and economies, going back to basics could be an ace up the sleeve for Zimbabwe’s economy.

The country is still largely an agriculture-based economy, with most of its industrial output back-linking to the sector.

According to data from the Food and Agriculture Organisation (FAO), agricultural activities in Zimbabwe provide employment and income for 60-70 percent of the population, supplies 60 percent of the raw materials required by the industrial sector and contributes 40 percent of total export earnings.

The sector also contributes approximately 17 percent to Zimbabwe’s gross domestic product (GDP). Covid-19 — with over 800 000 cases confirmed worldwide and 7 in Zimbabwe — has already caused both demand and supply shocks in numerous markets and economies across the globe.

And the Zimbabwean economy, like most, is not immune to the negative impacts of COVID-19.

“COVID-19 continues to exhibit significant disruptive potential on global financial markets… Zimbabwe’s links with China have been extensive given the Look East Policy that was adopted by the previous administration. Many products being sold in the formal and informal sectors are imported from China,” said analysts at local investment firm Morgan & Co.

“We opine that the spreading virus may continue to disrupt supply chains and create enough panic to keep consumers out of stores. The threat to the tourism sector is also very real as travel restrictions are being placed all over the world to contain the virus.

“On the other hand, China is a top export destination for Zimbabwe and one of the biggest export products is tobacco. We note that trade is needed to generate the much-needed foreign currency. This implies that if tourist arrivals dwindle while the demand for export products like tobacco is constrained, the repercussions will be catastrophic.”

However, to the extent of the significance of the agricultural sector to the Zimbabwean economy, critical interventions can help ensure that the local economy copes with the COVID-19 pandemic.

And even if the country fails to exports its products due to the shut down of global trade, it can at least ensure that local industry remains with a constant supply of raw materials, as well as internal food security.

It appears that the authorities have an appreciation of the importance of the sector, if the latest intervention is anything to go by.

Earlier this week, the Reserve Bank of Zimbabwe (RBZ) announced an increase in its productive sector facility, which will be focused on winter wheat production.

“The Monetary Policy Committee (MPC) of the Bank at its meeting of March 24, 2020 resolved to respond to the needs of the economy in the wake of Covid-19 through . . .  increasing the Medium Term Bank Accommodation Facility for supporting production sector activities by an additional $1 billion to $2,5 billion,” said RBZ governor Dr John Mangudya last week.

“The additional amount will be targeted at financing the 2020 winter wheat planting programme.”

The move by Government to boost financing of the winter wheat programme has the potential to increasing local wheat production, hence ensuring food security during a period of high uncertainty, but also potentially cushioning the country from a hefty wheat import bill.

Zimbabwe is a net importer of the commodity requires at least 450 000 tonnes of wheat per year to meet the national bread requirements.

Last year, the winter wheat programme targeted output of 75 000 tonnes, but it is likely — due to prevailing circumstances – that targets for the upcoming season will be higher.