An Economic Analysis Of Cigarette Demand In Zimbabwe

ABSTRACT

Empirical literature exists that cigarette consumption is a major epidemic internationally and locally. The study was mainly conducted to analyse cigarettes consumption in Zimbabwe from 1980 to 2015 by looking into the consumers’ response if there is a change in price, income, excise tax or an addition of more tobacco control events. The study sought to solve for the increase in the demand for cigarettes, where consumers continue to consume knowing the negative impacts it has on their lives. The study was conducted using secondary data, where the data for cigarette consumption per capita, real price of cigarettes, real GDP per capita, excise tax and tobacco control events was collected from annual reports and national survey’s done by Zimstat, World Health Organisation (WHO), World Bank, Global Youth Tobacco Survey (GYTS) and Global Adult Tobacco Survey (GATS). A descriptive research was conducted using a linear convectional demand model which was developed to analyse the relationship between the dependant variable cigarette consumption per capita and the independent variables which are the real price of cigarettes, real GDP per capita, excise tax and tobacco control events. The empirical literature shows that price elasticity was negative and income elasticity was positively related to cigarette demanded. Price and income elasticities were found to be -0.39 and 0.39 respectively, proving that both price and income have an influence on cigarette consumption. In conclusion, all variables had an impact on cigarette consumption but need to be implemented correctly to ensure a reduction in cigarette demanded by consumers in Zimbabwe.