SARFED FORESEES JOB LOSSES, FOOD INSECURITY

MBABANE – With inflation projected to increase to about 4.11 per cent in 2022 from 3.9 per cent this year, SARFED feels tough times lie ahead.

The Southern African Research Foundation for Economic Development (SARFED) felt some of the short and medium term implications of increase in inflation would result in high cost of living, loss of jobs, increase in food insecurity, eroded consumer purchasing power, decrease in personal savings, and increase in poverty rates. “The average person will have to spend more money to gain limited goods and services.  This is mainly caused by ripple effect of increased prices for commodities,” shared SARFED.

SARFED Regional Coordinator George Choongwa said increase in inflation had high possibility to create job losses as production tends to be reduced. “With the current situation of high level of uncertainty, most producers, especially in the manufacturing sector are forced to embrace cost-saving techniques of which one of them was cutting down of labour as it was also considered as a factor of cost of production,” said Choongwa.

Lost

Eswatini has so far been faced with over 8 000 jobs lost due to the COVID-19 pandemic, which was declared as a national disaster in 2020. The social unrest late in June subsequently brought about 5 000 more jobs losses, especially for lower and middle income earners. Regarding food security, SARFED noted that about 70 per cent of Eswatini population was living in rural communities where their main livelihood was that of subsistence farming. “However, with the increase in prices for consumer products including farming implements such as chemicals, seeds, and transport; most emaSwati in rural communities are expected to live under serious socio-economic conditions.

“Food inflation grew by an average of 4.1 per cent in the first 10 months of 2020, which is 2.0 percentage points higher than it was in the corresponding period of the previous year,” highlighted SARFED. In Eswatini, the main cause of inflation has been classified as cost push time due to blockage caused in the supply chain during the COVID-19 pandemic and political unrest. Therefore, as one way of cost recovery measures by the supply side of the economy, the increase in price has not been proportional to the consumer disposable income.  

Reconcile

However, this might reconcile and reach an equilibrium level in the medium and long term. Due to the unwanted developments, Choongwa said the country was expected to undergo and remain in what can be termed as consumption poverty status. About 58.9 per cent of emaSwati are said to be living below the nationally defined poverty line. Interventions suggested by Choongwa include the introduction by government of price capping strategy on selected commodities which were essential for human survival, some of which included essential food prices, rent, transport, education, medical, and energy, respectively. “It is one of the duties for companies to ensure that their employees were in a sound and healthy financial status for productivity to be appreciated at human resource level.

Crisis

“Therefore, with the oncoming financial crisis in Eswatini due to ripple effects caused by both COVID-19 and political unrest, it would be a best and prudence practice if companies embraced the human resource capacity development programmes for individual financial development,” suggested SARFED. SARFED further calls for the reduction the cost of production. “This can be done through the revision of the supply side of the economy through subsidies and deferred production costs,” said Choongwa. Meanwhile, the inflation rate is expected to increase on average of 9.5 per cent over a period of three years, starting from 2021 to 2023. In particular, the inflation rate will increase in 2022 to about 4.11 per cent.

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