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.”