THE World Bank has warned that most vulnerable households in Zimbabwe may fall below the poverty line due to increased food insecurity from the El Niño drought in the just-ended 2023/24 agricultural season.
As the new 2024/25 agricultural season kicks off this month, the effects of the El Niño-induced drought of normal to below average rainfall is expected to impact farmers severely.
In its latest update on the country's economy, the World Bank said the 2024 El Niño-induced drought could be the worst in over 40 years, resulting in widespread crop failure, water resource depletion and stress on pastures.''The affected areas are home to almost half of the population, with over 40% of them experiencing food insecurity,” the global financial institution said.
“Poor households, which spend about 48% of their total income on food, are hit hardest by reduced crop yields and increased prices. Consequently, many vulnerable households may fall below the poverty line. Additionally, the existing social assistance programmes have limited coverage and effectiveness, which hinders their ability to alleviate the impact of such shocks.”
The El Niño-induced drought will have such a huge impact because the agriculture and food sector contributes, on average, 17% to the gross domestic product, according to the World Bank.
Further, the sector contributes 40% of total export earnings and provides employment to nearly 70% of the population through its multiplier effect.
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“Large inter-annual and seasonal climatic variability severely impacts the primarily rainfed production base. This is exacerbated by low levels of farming technology, declining soil fertility and limited financing. The total agricultural output is set to contract by 17% in 2024 from 11,1% in 2023 due to the worst drought in 40 years,” the global lender said.
“Additionally, the sector suffers from low investment, weak support services, and poor physical and institutional infrastructure. The livestock sub-sector, crucial for food, capital assets and as a safety net for smallholder farmers, is hindered by animal health issues, diseases, zoonoses and antimicrobial resistance.”
The bank also warned that the macroeconomic instability, mainly around the currency volatility, would also add pressures on vulnerable households.
The currency volatility has increased the cost of doing business and also triggered a rise in local and foreign currency pricing, while wages continue to remain low or stagnated in the public, private and informal sectors.
“Macroeconomic vulnerabilities and a difficult business environment raise the cost of doing business, which in turn limits structural transformation and investment and increases the informal sector. The investment climate is further hampered by inadequate electricity supply,” the World Bank said.
“Public debt remains high and unsustainable, with rising debt servicing costs. To restore debt sustainability, a balanced approach is needed, including fiscal consolidation, growth-enhancing structural reforms and resolution of external arrears and debt restructuring through the Structured Dialogue Platform.
“Poverty reduction is constrained by structural factors like macroeconomic volatility, dependence on low-productivity agriculture, high correlation between weather shocks and agricultural production and low coverage of social assistance programmes."