Editorial Comment
The ruinous policies of the ruling paty have almost resulted in the complete disappearance of the middle class in the country.Distinct new classes of rich and poor have emerged in the country. Middle class plays an important role in every economy and the rise of the middle class often coincides with an economic boom.
A rising middle class changes consumption patterns.It brings about a rise in purchasing power and therefore a change in consumption patterns and this, in turn, affects the economic environment.
The middle class’s continued expansion is often powered by labor market and policy initiatives that push wages up, financial reforms that stimulate employment and income growth, and the rising role of private enterprise, which would encourage productivity and help more income accrue to households.
This does not seem to be the case in Zimbabwe, however.The purchasing power of ordinary Zimbabweans seems to have fallen over the years and this is having an effect on the whole economy. People are simply not spending enough on locally made goods as these are beyond their reach.
Government has resorted to overtaxing its citizens despite the fact that the majority of them are either unemployed or are earning very
little.
The result is that there is very little money to spend on local goods and services which are comparatively more expensive than imports. When people have no capacity to spend the economy shrinks.
For example, in 2010 production stood at 1,5 million loaves. Now the bakers are only producing 850 000 loaves a day due to poor demand.Only recently the First Lady Grace Mugabe complained that consumers were not buying her dairy products.
The recent wave of job cuts will most likely worsen the situation as banks were reportedly already being affectd as those who have lost their jobs fail to service their loans.
The economy is now in the hands of the majority Blacks but the pro-poverty policies pursued by president Mugabe mean that businesses can neither survive nor grow.Income inequalities,corruption and primitive accumulation of wealth has created two distinct classes in Zimbabwe. The haves and the have nots.
