World Bank country manager for Zimbabwe Marjorie Mpundu has said available statistics are showing that Zimbabweans have lost trust in the local currency and preferring the United States dollar and South Africa rand for transactions.
The local unit has been receiving a battering against major currencies such as the United States dollar.
This has seen an increased demand for the greenback which is seen as a store of value.
Speaking at the ZIMSTAT virtual dissemination event, Mpundu said their data is showing that Zimbabweans are losing confidence in the local currency.
“… the data shows that people are losing trust in the local currency,” Mpundu said. “Of the five key food items – maize meal, cooking oil, beef, rice, and brown or white bread – about 77% of the purchases were done in US$ or South African Rand,” she said.
“The use of foreign currency is more common in rural than urban areas. Rapid loss of its value means the currency cannot serve as the store of value and medium of exchange.”
A snap survey by the Business Times shows that in most suburbs, consumers are being made to buy groceries like bread and other basic items with foreign currency with traders rejecting the Zimbabwe dollar.
Local currency continues to lose value against the US dollar currently trading at ZWL$831.81 on the Reserve Bank of Zimbabwe-managed foreign currency auction system, while it is hovering around ZWL$1300 on the parallel market.
Year on year inflation in January 2023 stood at 229.8% compared to the 243.8% recorded in January 2022.
Economists anticipate the current trend to continue if not worsen as 2023 is an election year and more government spending is anticipated.
ZIMSTAT, with technical and financial support from the World Bank through the Zimbabwe Reconstruction Fund and UNICEF, has been conducting regular surveys of households over the phone since the onset of Covid-19.
Mpundu said the survey known as Rapid-Poverty Income Consumption and Expenditure Surveys, was instituted to assess the impact of the Covid-19 shock on key socioeconomic outcomes such as employment, school enrolment, food security, and poverty, among others.
On employment, Mpundu said: “First, employment has by and large returned to the pre-pandemic level. Any fluctuation is likely due to seasonal variation or factors other than the lockdown, closures, and trade restrictions associated with the pandemic.”
“Second, more than two years after the pandemic, the coverage of social assistance programmes remains low compared to the need. Despite many people losing their jobs, livelihoods and income, the coverage and adequacy of social assistance did not increase in response to the large systemic shock of the pandemic.”