HomeBusinessSA crisis jolts Zimbabwe firms

SA crisis jolts Zimbabwe firms

BY CHIEDZA KOWO

ZIMBABWE’S industries kicked off a push to broaden foreign markets last week, after plunging into crisis as three weeks of relentless turmoil threatened to shut down South African export markets, while frustrating efforts to secure raw materials.

The push, initiated by the Confederation of Zimbabwe Industries (CZI), came after rioters angry about the jailing of former president Jacob Zuma overran industries, torching companies, blocking roads, while closing corridors to ports.

As raw materials stocks for Zimbabwean manufacturers depleted, the CZI said in a paper to its membership that three weeks of upheavals must prompt companies to rekindle a discussion towards diversifying markets.

In detail, the paper demonstrated that Zimbabwe had almost turned into another South African province, with 50% of imports originating from that market, while half of Harare’s exports ended up in the same country.

The CZI said 58% of raw materials imported in 2020 originated from the South African market.

Zimbabwe’s under-siege industries, possibly attracted by their close proximity to South Africa, have depended on that country for decades.

Zimbabwean executives have also taken up key roles in South Africa, making it easy to agree on deals including payment terms.

“If South Africa sneezes, Zimbabwe catches a cold,” the CZI said in the paper titled ‘Impact of Disturbances in South Africa’.

“How South Africa handles this delicate matter has a huge bearing on our economy.

“As industry, will need to aggressively explore value chain possibilities to promote the local manufacture of some of the raw materials where possible,” said CZI.

It said companies must leverage on the African Continental Free Trade Area (AfCFTA), a US$3,4 trillion bloc established in January, to expand the scope of raw material sources and destinations for Zimbabwe products.

However, Zimbabwean firms have indicated that they are ill equipped to compete in the bloc encompassing 55 African Union members.

But the CZI said steps towards this crucial integration must kick  off to avoid the shortcomings of the current national export strategy.

“The heavy reliance on the South African economy can be mitigated by leveraging on the AfCFTA, which is turning the continent into one huge market, making the issue of political and economic risks (especially from SA) less impactful,” CZI said.

“It is, therefore, more imperative for Zimbabwe to push for ease of doing business reforms that ensures that the country is the most efficient and most competitive place of production in the region and continent, thereby increasing its attractiveness for all types of investments.

“The riots are likely to impact trade with South Africa from two angles.

“First, there is likely to be reduction of exports destined for SA and imports from that market.

“Second, exports for the global markets that pass through SA are going to be affected, as well as imports from the global market that come through SA.”

The paper added: “According to latest trade figures from ZimStat, Zimbabwe’s trade deficit with South Africa shrunk by 58 percent to US$50 million in April 2021, compared to March 2021.

“Exports to South Africa increased by 26 percent to US$176 million during the month compared to March 2021. Imports from SA declined by 12 percent to US$226 million.

“These gains in trade are now being threatened by the ongoing riots in South Africa.

“The majority of our imports come from South Africa including critical raw materials.

“Torching of trucks and closing of roads is resulting in supply chain disruptions.

“There have been delays in the movement of cargo and in some instances a complete shutdown.

“Production will be greatly affected in Zimbabwe because our companies depend heavily on South Africa for raw materials.”

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