When South Africa sneezes, Zimbabwe catches the cold

By Farai Shawn Matiashe
Posted on Wednesday, 21 July 2021 11:03

Zimbabwe's President Emmerson Mnangagwa and his South African counterpart Cyril Ramaphosa in Harare, Zimbabwe March 12, 2019. REUTERS/Philimon Bulawayo

On Friday 9 July, South Africa, the continent’s most advanced economy, witnessed its worst unrest in decades with angry protesters turning violent, malls being looted and public and private properties set ablaze. The rioting hurt the South African economy and this in turn hit hard its neighbours - those who rely heavily on Pretoria for trading. Zimbabwe in particular has caught a chill. 

The violence, to which President Cyril Ramaphosa responded by deploying the military, has claimed the lives of over 70 people while over 1,700 people have been arrested.

Violent protests erupted in the eastern province of KwaZulu-Natal after former South African president Jacob Zuma was jailed on 7 July for contempt of court after he refused to testify before a special commission that has been investigating corruption allegations linked to his tenure as head of state.

The week-long riots did not only impact South Africa’s economy but those of other nations in the Southern Africa Development Community (SADC) region including Botswana, Namibia, Lesotho, Swaziland, and Zimbabwe.

And an unstable South Africa risks weakening the socio-economic ties that exist within the SADC bloc, says Tinashe Manzungu, president of the Zimbabwe National Chamber of Commerce (ZNCC).

On 15 July, President Emmerson Mnangagwa took to Twitter calling for the violent protests in South Africa to be “resolved peacefully”.

“Only when there is peace in South Africa, is there peace in our region,” he said.

A peaceful region means Zimbabwe and other southern African states can easily make use of the Durban port for imports and exports to the international market.

Zimbabwe’s heavy reliance on South Africa

With 40.8% of its imports, valued at $1.97bn, coming from South Africa, Zimbabwe is heavily dependent on its neighbour.

  • After South Africa, the landlocked nation imports 22.9% of material from Singapore, valued at $1.11bn and 8.43% from China valued at $407m.
  • In 2019, Zimbabwe’s total imports were at $4.83bn, according to the Observatory of Economic Complexity (OEC).
  • 80% of Zimbabwean companies in the agriculture and horticulture sectors source their raw materials from South Africa, according to a Confederation of Zimbabwean Industries (CZI) report entitled ‘Raw Material Import Exposure for Zimbabwean Industries’.
  • South Africa is also a major source of imported raw materials for local drink, tobacco and beverages producers, notes the CZI.

According to Denford Mutashu, president of the Confederation of Zimbabwe Retailers (CZR), the country imports more than 75% of its goods and services from South Africa.

The real impact – in numbers – to Zimbabwe’s economy is difficult to assess at this stage, but it will be significant, Henry Ruzvidzo, president of the CZI, tells The Africa Report.

Zimbabwe has to reroute its imports out of economies beyond SA and do more to promote efficiency through the Beira Port. One also hopes the instability in Copa Delgado in Mozambique is contained urgently.

“We expect increased logistics costs, direct loss of goods in transit as well as disruption to markets. The long-term impact will include stock-outs, loss of revenue, higher logistics costs and reduced foreign currency inflows,” he says.

But what is certain, is that Zimbabweans should brace themselves for shortages of basic commodities, says Vince Musewe, an economist. “The riots will create bottlenecks in trade including essential imports which may result in local production problems [as well as] a general increase in prices of goods imported from South Africa and local [ones], of which a large portion are South African imported raw materials. We may therefore experience some shortages,” he says.

The real problem lies in the supply chain that has been disrupted by the violence. “South Africa is our major trading partner [and] the protests have an impact on our economy,” says Manzungu. “Our businesses will not be able to get raw materials in time.”

South Africa is also a major export destination for Zimbabwe’s tobacco – often referred to as ‘the golden leaf’ for its value. But such disruption of South Africa’s “vibrant, well-oiled supply chain for raw materials, capital goods, machinery and equipment,” will hit Harare hard, adds Mutashu.

Calls for Zimbabwe to become self-reliant

Estimates indicate that about three million Zimbabweans are residents in South Africa, including undocumented people who left their home country due to economic hardships and unemployment, to work in factories and farms in this regional economic hub.

Mutashu says the riots will soon escalate into a humanitarian catastrophe of monumental proportions. “[Many] Zimbabweans and other nationals will be jobless and have to be absorbed back into their countries of origin soon,” he says. “Zimbabwe, just like the region wants a stable, peaceful and socio-economically viable South Africa for bilateral and regional stability.”

The Zimbabwean government has been on a mission to boost its local industries over the years but Mutashu believes there is a need to reroute imports beyond South Africa.

“Zimbabwe has to reroute its imports out of economies beyond SA and do more to promote efficiency through the Beira Port. One also hopes the instability in Cabo Delgado in Mozambique is contained urgently,” he says.

The only way for Zimbabwe to insulate itself against such regional disasters it to strengthen value chains across the various sectors of the economy so it can export processed products.

“In doing so the country’s focus on value addition and beneficiation cannot be over-emphasised. The balance of payment deficit can drastically reduce or be wiped off by processing our minerals and agricultural produce before export,” he says.

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