Zimbabwean Businesses Reassess Overdependence On South Africa

2 years agoFri, 23 Jul 2021 06:56:33 GMT
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Zimbabwean Businesses Reassess Overdependence On South Africa

The recent deadly riots in South Africa’s Kwazulu-Natal and Gauteng Provinces which resulted in the looting of malls and warehouses and the closure of busy highways have forced Zimbabwean business people to rethink their country’s unhealthy overdependence on its neighbour.

Writing on Twitter almost immediately after the outbreak of the riots in South Africa, Busisa Moyo, a respected business leader in Zimbabwe, presciently warned:

The disturbances in SA will affect the entire region. We will all feel it in the next few days. Conserve cash, food, raw materials and other necessities.

The region especially Zimbabwe is not ready for a life without a functional Durban Port and key roads the N3 and N1.

According to estimates, the riots caused damage of US$2 billion. While calm is returning to South Africa and the N3 that connects Durban to the commercial capital Johannesburg has been reopened, Zimbabwe is still counting the cost of the riots.

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Butler Tambo, a Zimbabwean independent economic analyst, warned that prices of goods will skyrocket. He said:

Countries like Zimbabwe with industrial capacity utilisation of less than 60% are landlocked and rely on South African ports of entry for vital imports.

Prices of basic commodities in Zimbabwe will further skyrocket, that is if the products will still be there on shop floors.

Unemployment will rise in SA, meaning that an estimated one million Zimbabweans in that country will become part of the unemployed.

Diaspora remittances from SA will significantly drop, meaning massive and abject poverty for Zimbabwean families reliant on remittances from that country.

Add to this tragic tale the lockdowns and restrictions under COVID-19, and it becomes a ghastly sight.

When the opportunities for employment shrink in SA, the next chapter is that xenophobia will rear its ugly head again and foreigners will be blamed for the mess lying ahead.

According to the Confederation of Zimbabwe Industries (CZI), Zimbabwe imports 58% of its raw materials from SA, while only 7% are imported from other countries in SADC.

Europe is the source of 13% of Zimbabwe’s imports and China accounts for 11%.

Sekai Kuvarika, the CEO of the CZI, says Zimbabwe’s industry is definitely going to be affected by the unrest in SA as most of its raw materials come from SA. She said:

We may not be able to immediately quantify the impact, but Zimbabwe’s industry is certainly going to be affected in the short to medium term.

Our industry’s capacity utilisation improved to nearly 58% over the past year, up from about 36% in 2019.

The closure of the major routes used for the transportation of raw materials and other goods — though they may now have reopened — means that production will be affected.

This in turn might see a dip in capacity utilisation in the short to medium term.

Researcher Prosper Chitambara of the Labour and Economic Development Research Institute of Zimbabwe says Zimbabwe should consider increasing the use of other ports of entry in Mozambique, Namibia and Tanzania for its imports. Said Chitambara:

It is important in the medium to long term for Zimbabwe to make use of other routes for imports, especially those that do not necessarily originate from SA.

It is clear that too much reliance on SA can have serious negative consequences, as we are seeing in the current scenario.

Alois Burutsa, the general manager of Buy Zimbabwe, a lobby organisation that seeks to promote the consumption of locally produced goods and services, said:

What we are saying as Buy Zimbabwe is that we need to greatly reduce our dependency or reliance on foreign products, foreign raw materials and foreign finished products, and consume locally produced goods and services.

We are also in full support of the government’s local content policy, as it is now more critical for us as a nation to localise our value chains and start getting our raw materials locally so that we become as self-reliant as possible as a nation to avoid such exogenous shocks.

More: TimesLive



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