Harare, Zimbabwee – Four months ago, Simba Muchingami was a very happy man.
Customers are queuing outside his unassuming bakery in Kuwadzana, a densely populated area on the western outskirts of Zimbabwe’s capital Harare, for freshly baked sugar cookies, doughnuts and confectionery. other.
But these days, his medium-sized electric industrial furnace usually cools down even in the middle of the morning, unlike the previous times when everything was already humming at dawn.
“This place used to be packed around this time,” the 33-year-old told Al Jazeera. “Since 5 am, we have been busy. Now there’s no one.”
A tray containing some donuts lay abandoned on the floor.
Packaged fresh rice paper cakes were arranged neatly on the large table but there were no guests. In the corner, a worker was sitting idly on a chair.
In 2000, former President Robert Mugabe expropriated the farms from white commercial farmers – who had acquired them during colonial times – in a controversial program of land reform, and distributed them to the public. new black owners.
Most of them have little or no capital, resulting in reduced agricultural output, forcing Zimbabwe to look for alternatives abroad.
Since then, the country has depended on imported wheat – up to 40% of all imports coming from Russia by 2021 – for bread, a staple of the country.
After Russia invaded Ukraine in February, global supply chains were disrupted, causing a spike in commodity prices – which has severely affected many countries, including in Africa.
In Harare, Muchingami found things difficult for six months. He and other bakers raised the price of bread to $1.30 from $1 due to an increase in the price of key ingredients.
These days, he sells half of what he used to sell, even 4 months ago, and he has laid off 5 of his 8 employees.
‘The impact… is huge’
Harare-based independent economist Victor Bhoroma said the economic impact of the war was pronounced in Zimbabwe because the country was dependent on imports.
“The impact on the Zimbabwean economy is huge because 80% of the raw materials used in the local manufacturing sector are imported, so the bottlenecks caused by the war have slowed down the process,” said Bhoroma. freight into this country.
He added: “Increasing transportation fees and commodity prices (fuel, wheat, soybeans, fertilizers and chemicals) have also meant that local production costs have skyrocketed. “The cost of fuel has gone up from about $1.40 per liter before the war to $1.90 now.”
The southern African country is in an economic crisis due to high inflation. According to the Zimbabwe Congress of Trade Unions (ZCTU), 90% of the country’s population is unemployed and its manufacturing output is falling.
Some manufacturing industries that depend on raw materials from farms are currently operating below capacity due to scarcity of raw materials.
So Zimbabwe’s bakers are feeling the heat.
Muchingami said Rico lard, an important baking ingredient, was $3 a kilo four months ago but is $4.50 a kilo now. The price of two liters of cooking oil is now $4.80 compared to $2.80 a few months ago. A 50 kg bag of flour is currently $35 from $28.
“Unfortunately, our prices haven’t gone up much,” he told Al Jazeera. “We can’t pass our costs on to our customers because our customers are suppliers and they don’t understand that we need to raise prices.”
“We could barely keep our heads above the water. If we raise our price to $10 Z bonds ($0.0125) for every dozen [pieces], it’s a war with the customer,” he said. “I have to increase the price gradually.”
In a country with a history of hyperinflation and a rapidly depreciating local currency, there is a common dilemma.
In 2009, the country had to convert its currency to the US dollar as hyperinflation destroyed the old currency. And now, the Zimbabwean dollar is being traded at $800 on the black market.
Many people can’t keep up with the cost of living, want to buy in local currency, even many suppliers can’t keep up with production costs, want to be paid in foreign currency.
“We charge in US dollars but customers say they don’t want to pay it. So we sell at popular black market prices [for the local currency]. “
Inflation in Zimbabwe has also been on an upward trend over the past few months. It rose to 259% in July from 191% in June due to the introduction of new currency bills into the economy and a spike in global commodity prices.
Bhoroma fears that things could go badly and quickly.
“Considering we have elections around where subsidies for farmers and households are important, I don’t see any disruption to money printing or any reform,” he said. How to build trust in the central bank before the 2023 elections.
Alarm
National Foods Holdings Limited, the largest miller in the country, has sounded the alarm, warning of multiple price shocks caused by the war in Ukraine.
Prosper Chitambara, a development economist with the Labor and Economic Development Research Institute of Zimbabwe (LEDRIZ) in Harare, said poverty will increase.
“The main effect of the war in Ukraine is that it will reduce economic growth. Last year, the economy grew 8%. Due to war and other internal factors, overall growth will be adversely affected.”
Chitambara told Al Jazeera: “The war in Ukraine has worsened an already very bad situation in Zimbabwe.
But while the global economic environment remains volatile, Zimbabwe’s rising exchange rate and public spending are also to blame, he said.
“Public spending and money supply also tend to increase during elections. That is not good for the economy,” he added.
For smaller businesses like Muchingami’s, this can be a death knell.
In addition to soaring prices, he has also faced the blackout that Zimbabwe has experienced over the past few months.
Although he had a brave face, his voice betrayed the tension he was under.
“If only the exchange rate were stable for a month or two, I would be fine. When you think you’ve made a profit, the exchange rate changes and your earnings disappear as well,” he added.
