Further depreciation of ZWL negatively impacts household purchasing power

• The 2023 harvest is ongoing for large-scale farmers and households in the resettlement areas but is largely complete across the rest of the country. The harvest is improving food availability and driving widespread Stressed (IPC Phase 2) outcomes in deficit-producing areas and Minimal (IPC Phase 1) outcomes in surplus-producing areas. However, for some typical deficit-producing areas in the south, east, west, and extreme north, own-produced stocks will be short-lived due to relatively low production. Crisis (IPC Phase 3) outcomes will likely emerge in the worst affected areas by August/September. In the typical surplus-producing areas, worst-affected households will likely begin facing Stressed (IPC Phase 2) outcomes by September as food stocks decline.

• By the end of May, the parallel, official auction system and interbank exchange rates increased by about 100 to 150 percent compared to last month, marking a significant depreciation of the ZWL. In some formal retail outlets, there are reports of artificial shortages of some basic food items as some wholesalers and retailers allegedly diverted stocks onto the black market, which operates exclusively in USD. The depreciation of the ZWL and high prices increasingly negatively impacts the purchasing power of poor households and households earning in ZWL. Some basic commodity ZWL prices spiked by more than 100 percent in May, though prices in USD remained relatively stable. In response, among other measures, the government removed all import duties and restrictions for 14 basic commodities, including maize meal, flour, cooking oil, rice, milk, and salt, to ensure adequate supply and cheaper commodities. Companies can also retain all their foreign currency earnings in-country to reduce demand for foreign currency on parallel and official markets and help stabilize the ZWL.

• The ongoing harvest is improving household food access and increasing market supplies of staple grains, particularly maize, in most markets. Relatedly, maize prices in USD are declining, especially in typical surplus-producing areas. However, maize prices in ZWL continue to increase, driven by the depreciation of the ZWL in the parallel market. In typical surplus-producing areas, some households have started earning income from selling food and cash crops. However, in some typical deficit-producing areas, a below-normal harvest will likely constrain household income from crop sales.

• Across the country, households are increasing their engagement in various casual labor opportunities, self-employment, and petty trade to earn additional income following the end of the harvest. However, income will likely continue to be impacted by low demand and limited liquidity by better-off households, especially in typical deficit-producing areas. In May, the second harvest and sale of Mopane worms (Gonimbrasia belina) did not occur following the early cessation of rainfall in February, limiting household access to an important seasonal source of income. Additionally, the lower-than-normal water resources in the semi-arid areas are constraining households' engagement in gardening and other seasonal activities. Some cattle are also beginning to travel further for water, with pastures quickly deteriorating in some areas.

Recommended citation: FEWS NET. Zimbabwe Key Message Update May 2023: Further depreciation of ZWL negatively impacts household purchasing power, 2023.