Dollarisation kickstarts Zimbabwe trade growth

The light has turned from red to amber. That’s how Duncan Bonnett, researcher at Africa information specialists Whitehouse & Associates, describes trade prospects with Zimbabwe. But while goods are beginning to flow once again thanks to dollarisation of the economy which has helped stabilise inflation and has given exporters more confidence about being paid in a currency in which they can trade, political uncertainly remains a major obstacle. “The international community is very keen to see the political impasse resolved once and for all, but one half of the unity government is still bent on economic policies that are not sustainable,” says Bonnett. An example is the recent indigenisation act, guaranteeing 51% Zimbabwe ownership of all businesses worth over US$ 500 000 – a move that has huge implications for foreign and local investment. From an SA perspective Zimbabwe remains one of our top export destinations, overtaken by Mozambique and followed by Zambia. “What you’re starting to see, however, is a slight shift towards what you had 10 years ago in terms of the export profile. Machinery, mechanical appliances, inputs into the manufacturing and agricultural sectors, and consumer goods like vehicles were the strongest part of our export basket. That shifted over the last decade to fuel, electricity and basic food commodities – so if you looked at the global picture of exports into Zimbabwe from South Africa it seemed to be business as usual. But the actual composition of that export basket changed quite dramatically and reflected a country in crisis.” The slow change in that export pattern reflects the opportunities that investors see in the country, says Bonnett. “And those opportunities are across the board – from mining to tourism, hotels, ICT and some sectors of agriculture like sugar and cut flowers.” But it’s not an easy market. Apart from the political stumbling block, infrastructure has been badly neglected and two areas of critical importance are power and water and sanitation. “You can’t manufacture without electricity – which has been badly hit – and you need water and sanitation for industrial and consumer purposes,” says Bonnett. The road infrastructure is less of a problem, although it has deteriorated over the last decade, and in his view, the physical infrastructure outside of power and water is probably still better than many other parts of Africa – and would be easier to rehabilitate than a postconflict Mozambique, for example. The mining industry too is beginning to revive. “It’s looking at re-establishing itself in Zimbabwe – and from an SA perspective a lot of mine operators and procurement agents are based in South Africa, which presents significant export opportunities.” Clearly the outlook is more positive than it has been for some time – which is good news not only for shippers but for transport and logistics operators on the route. Dollarisation has reduced the ‘Alice in Wonderland’ economics that prevailed, and created a more stable and predictable environment, which is a good start, says Bonnett. “You will see people positioning themselves in the market. The hospitability industry is beginning to put its roots down in anticipation of things improving.” And while there’s unlikely to be a sudden mushrooming of massive opportunity until there is a lot more certainty around the political impasse and regulatory environment, prospects have clearly not looked as good for some time.”