Zimbabweans Head Back To Villages As Rentals Spike

Many Zimbabweans living in cities could be evicted from rented houses, as the local unit continues in a tailspin, eroding purchasing power, several reports indicated this week, as desperate authorities were locked in ad hoc meetings to thrash out a solution.

According to the Zimbabwe Price Check (ZPC), which tracks pricing trends, waves of rental hikes in United States dollars have pushed low-income earners to a corner.

When they surrender their lodgings, many either find respite in lower cost shakes mushrooming across cities, or head back to village life.

“They will have no option but to head back to their villages,” Tapiwa Sibanda, head of strategy at Trade Winds, said.

But as they head out to start new lives, they leave sources of income behind.

The last time such a huge migration took place was in 2020, when Covid–19 induced hard lockdowns crippled economies, forcing companies to send workers home to avoid contagion.

At the heart of the current crisis — a repeat of troubles that confronted low-income earners in 2008 — is Zimbabwe’s tapering currency.

The unit has suffered huge knocks in the past two months, dropping to as much as US$1:ZW$2 700 on the parallel this week.

This rate was about US$1:ZW$1 200 in March.

During the same period, the Zimbabwe dollar has depreciated to US$1:ZW$1 125,66 on the official market, a 24% fall.

“There is evidence that a lot of people are struggling to pay their rentals as business slows down,” ZPC said this week.

“Most rentals are in US dollars and landlords have been hiking these for the past two or so years. It seems they have now reached a ceiling.”

A ruthless erosion of incomes for about one million Zimbabweans still formally employed, and narrowing opportunities for those in the informal sector, have underpinned tenants’ struggles.

Many of over five million Zimbabweans now earning their living in the informal sector were victims of the economic crisis.

According to the Ministry of Finance and Economic Development, over 55 000 Zimbabweans lost their jobs when 6 500 firms closed down between 2011 and 2013.

“There is rampant rejection of the local currency in the market,” Zimbabwe’s finance minister between 2009 and 2013, Tendai Biti said.

“Local manufacturers are openly rejecting the RTGS, proving once more that an economy will never be run by Statutory Instruments. There is an urgent need to address the failed de-dollarisation experiment.

“What a disaster. Zimbabwe has remained trapped by multiple crises — economic, political, and social. The decay of infrastructure and the collapse of public services, the mismanagement of exchange rate (and) the closure of political space, point to the fact that this lot (in government) is (the) worst regime in (the) history of governments,” he said.

But as the domestic currency slows, government has blamed several factors.

According to Reserve Bank of Zimbabwe (RBZ) governor John Mangudya, most of the foreign currency generated through tobacco sales this season has so far been used to pay loans.

Most tobacco contractors are foreigners, which means Zimbabwe has so far earned little from the forex spinning crop.

But some say rocketing parallel market rates have been precipitated by government’s move to settle billions in Zimbabwe dollars owed to suppliers.

Most of these firms, who are paid in Zimbabwe dollars, flood the black market as soon as they receive their allocations, scrounging for US dollars to preserve value.

This huge demand for greenbacks further exerts pressures on the local currency.

In August last year, government announced a blanket ban on payments to suppliers, blaming them for inflaming an already volatile exchange rate by inflating prices.

But with nothing in their purses, many of these firms faced collapse.

This week, the Zimbabwe Coalition on Debt and Development (Zimcodd) said it was concerned about the rate of Zimbabwe dollar decimation.

“Many factors are driving the Zimbabwe dollar’s free fall, including among other excessive election-linked fiscal spending, unsustainable money supply growth, dwindling market confidence, adverse Zimbabwe dollar inflation expectations, rent-seeking behaviours and rigid exchange rate management,” Zimcodd said.

It said cumulatively, the Zimbabwe dollar had shed over 30% of its value since the beginning of the year on the official forex market.

Zimcodd’s concerns were also shared by other experts.

“Mounting Zimbabwe dollar depreciation and inflation have significantly reduced purchasing power, a scenario that is likely going to increase pressure on the government to review salaries again,” Inter Horizon Securities, an advisory firm, said.

Zimcodd added: “Since businesses are driven by the profit motive, they are benchmarking Zimbabwe dollar prices at or above the prevailing parallel exchange rate to reduce exchange rate losses. The disregard for exchange regulations by corporates is largely driven by perpetual foreign currency liquidity challenges in the official markets.

“This illiquidity is forcing many formal businesses, which are failing to access the RBZ forex auction market to join their informal counterparts in the expensive and too volatile alternative markets to meet operational forex demands.

“Statistics show that the local unit is massively deteriorating against the US dollar in parallel markets, significantly constraining household budgets, widening income inequality and plunging citizens into extreme poverty,” Zimcodd said. Zim Ind