BATANAI MATSIKA
Reports out of China indicate that the government will now allow couples to have up to three children, after census data showed a steep decline in birth rates.
Population statistics show that there were 12 million births in China in 2020, down c18% annually and the fourth straight year of declines.
Family planning restrictions have existed in China since 1980, when the government instituted a one-child-per household policy.
This was part of a broad programme designed to control the size of the rapidly growing population of the People’s Republic of China.
The government then relaxed that cap to two children in 2015.
To enforce birth limits (of one or two children), provincial governments could require the use of contraception, abortion and sterilisation to ensure compliance and imposed enormous fines for violations.
China also provided a nominal reward to families with one child which included issuing one-child glory certificates.
Population growth rates have profound implications for a country’s economic success.
Fewer babies implies fewer future workers. On the other hand, large changes in the population growth affect aggregate consumption and savings.
For example, during the baby boom the United States of America (USA) experienced after World War II, the dramatic rise in births led to a higher dependency ratio, which means that there was a large portion
of the population under the age of 15 and over the age of 65 that relied on those in the work force (ages 15–64).
While many parts of the world face stagnant population growth today, Africa’s population is set to double by 2050.
The two main driving forces behind this surge in births and children are continued high fertility rates and rising numbers of women able to raise children on their own.
According to Country meters, the Zimbabwe’s population is projected to increase by 332,363 people and reach 15,412,353 in the beginning of 2022.
The natural increase is expected to be positive, as the number of births will exceed the number of deaths by 377,151.
Estimates indicate 1,490 live births average per day (62.09 in an hour) and 57 deaths average per day (19.04 in an hour).
All in all, population growth in Zimbabwe has averaged c2.0% since the 1980s.
That said, a baby boom may in the long term create significant pressures on the economy especially if it is not accompanied by sustainable economic growth.
We opine that GDP growth should at least be 1.5-2.0 times the population growth for an economy like Zimbabwe to benefit from a surge in numbers.
Looking at the stock market, the usual question of course has been, “Which are the stocks to BUY for the long term?”.
In a developing country like Zimbabwe, the usual suspects will be the consumer facing stocks such as Econet, BAT Zimbabwe, Innscor, Delta, Simbisa Brands and OK Zimbabwe given that these tend to
be supported by demographics (population growth rate of c2.0% and a young population).
Batanai Matsika is the Head of Research at Morgan & Co, and Founder of piggybankadvisor.com.
He can be reached n +263 78 358 4745 or batanai@morganzim.com/batanai@ piggybankadvisor.com
