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Chaos in South Africa amplifies Zimbabwe vulnerable economy

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MASS looting that almost brought South Africa to a halt last week, subsequently causing widespread delays in supplies of critical raw materials for industry around the country, is a wake-up call for Zimbabwe to stop relying on its neighbour, analysts have said.
NYASHA CHINGONO
Zimbabwe, a key gateway for South Africa’s exports to the rest of the continent, relies on the regional economic powerhouse for throughput after years of bad governance disrupted supply chains.
Experts and critics concur that it is now apparent that when South Africa sneezes, Zimbabwe catches a cold and that has been proven repeatedly.
But the Zimbabwean authorities continue to sit back and enjoy the tag “South Africa’s supermarket”.
According to industrialist Busisa Moyo, Zimbabwe imports 75% of raw materials, finished products and fuel from South Africa.
Last week’s riots that rocked the country following the arrest of former President Jacob Zuma exposed Zimbabwe’s unhealthy reliance on South Africa.
With Durban, which is arguably Zimbabwe’s major channel of portable and industrial goods, under siege from riotous mobs who stormed the port, the country was left with no reliable source of imported goods.
What made the situation worse is that the N1 and N3 roads, which are major routes for trucks, were blockaded by the violent looters.
This led to panic in the manufacturing sector as suppliers sent notices of delay in the delivery of raw materials. Some suppliers declared force majeure, freeing themselves from the fulfillment of commercial contracts.
Dozens of trucks were stuck in South Africa with no goods for delivery, leading to panic among their customers in Zimbabwe.
Moyo, who is also the chief executive officer of Bulawayo-based cooking oil bottler United Refineries Limited largely dependent on South Africa for raw materials, said while most suppliers did not cancel orders, logistics were difficult last week.
He said the over-reliance on South Africa as the major supplier of critical commodities was detrimental, not only to Zimbabwe but also other economies in southern African. Critical supply lines are disrupted whenever disturbances rock that country.
“South Africa’s dominance is a key concern to the region, and this is a wake-up call that we should reduce dependence on South Africa for trade routes, raw material supply and services in general as a risk management tool to protect the resilience of our economy. The answer is switching to rail, establishing dry ports, progressing the port area that we have been given for development in Walvis Bay, re-engaging Beira as an option, expanding Forbes Border Post and Plumtree, among other infrastructures solutions,” Moyo said.
Zimbabwe spends US$3 billion annually on imports from South Africa.
South Africa plunged into chaos this week, with mass looting happening in KwaZulu-Natal and Gauteng following Zuma’s arrest.
What began as an ostensibly innocent campaign to overturn the court’s decision to jail Zuma degenerated into chaotic scenes, with thousands seen looting groceries, furniture, plundering warehouses while others stole goods from containers in transit at Durban port.
With South Africa already showing signs of critical shortages of groceries, as citizens of that country joined long queues for basic groceries, the impact on Zimbabwe was expected to be severe.
South Africa’s economy is the engine room of southern Africa. The economies of Lesotho, Swaziland, Namibia, Zambia and Malawi are expected to suffer from the backlash of the riotous looting.
Moyo said Zimbabwe’s raw material import cover is between one and two weeks and any further disruptions to supplies would have choked an already struggling economy, which is heavily dependent on imports.
If the riots had continued, Zimbabwe would have faced critical shortages.
“Our raw material import cover for critical commodities is about one to two weeks, but disruptions longer than one business week can start to be felt very quickly and show up in shortages. The issue can quickly spiral out of control if not planned for accordingly. The saving grace is that we are coming off a bumper harvest and secure of critical basics,” Moyo said.
Economist Chenayi Mutambasere said Zimbabwe must shake off its dependency on South Africa.
“Zimbabwe needs to put in place policies that build local resilience. Our domestic market is weak, local products are more expensive than South African products. Zimbabwe needs to strengthen local supply chains encouraging value addition to raw materials through innovation,” she said.
She urged the authorities to invest in innovation to lower the cost of production.
“Innovation means cheaper local products and increased employment,” Mutambasere added.
Mutambasere said Zimbabwe will pay a heavy economic and social cost for over-reliance on South Africa.
“My biggest concerns are the health and social care costs. With Zimbabwe going through the third wave of Covid-19, with an anticipated fourth wave on its way, the biggest risks are the mortality rate and long-term illness. Not having access to medicines will also result in a prolonged lockdown period as it becomes more difficult to reduce infection. The socio-economic impacts associated with these are strains on household income and the national budget, they will have the biggest cost on the Zimbabwean economy. To counter this, government would do well to increase imports of packaged medicaments from other partners to counter the predicted shortage,” Mutambasere added.
The South African crisis has claimed dozens of lives while property worth millions of dollars was destroyed, with unquantified merchandise looted by mobs.
Independent economist John Robertson said the spectre of higher prices looms large.
“The most threatening short-term cost could be higher prices due to scarcities and uncertainties over immediate supplies. In the longer term, if the problems persist in South Africa, investment inflows could dry up for all southern African countries. If all countries are forced to remain backward by being shunned by investors, every one of these countries will become dumping grounds for cheap Chinese products and unemployment plus poverty will deepen,” Robertson warned.
To end Zimbabwe’s over-reliance on South Africa, Robertson urged the authorities to encourage investment to ensure import substitution.
“Zimbabwe’s government should be working hard to remove all barriers to increased investment spending on manufacturing production. At present, many investments are being held up by the lengthy procedures involved in getting licences and permits, and in getting approvals from the many new authorities in Zimbabwe that can demand compliance with application procedures.
“Large fees are involved in many of these, and they serve no purpose other than funding the salaries of government inspectors who run pointless regulatory authorities. By easing the investment procedures, more factories would be restored or built to provide Zimbabweans with home-made goods that would make imports unnecessary. Thousands of factories that used to supply most domestic needs were forced out of business. Government must remove the problems that caused these manufacturers to lose their ability to function,” Robertson said.

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