Events of next two months will decide overborder currency levels - Safto

WITH THE economies of Malawi and Zimbabwe having been given a hefty shake in recent times, Safto (SA Foreign Trade Organisation) is advising exporters to be careful - and to treat every deal on a case-by-case basis.
The Zimbabwe crisis is a far more serious situation for SA exporters, said Duncan Bonnett, the organisation's researcher for Africa and the Middle East, in relation to the political problems and the effect on the economy.
Part of the importance of Zimbabwe is, of course, the sheer volume of SA trade with that country - our Number One trading partner on the continent. Safto figures show that exports in 1996 - the latest complete year's figures available - were R5,4-billion, while imports were R1,2-bn.
Trade with Malawi, meantime, was R961-million in exports and R295-m in imports. Much smaller, although still retaining for Malawi the title of SA's sixth largest African trading partner.
In Zimbabwe, Bonnett sees the events of the next two months deciding on the longevity of that country's currency woes.
The land issue and reparations to war veterans are stumbling blocks to Zimbabwe getting foreign funding, he said, pointing to the multi-billion nature of both of these self-assumed costs facing the Mugabe government. With the current rioting, it is still uncertain how Zimbabwe will get out of all of this - although strong arm tactics are presently being used.
But this type of martial law can only be a stop-gap measure, and at the same time it can't be described as actually being an attraction for potential future investors or aid donors.
As with our other commentators, Bonnett describes the Malawian problem as now being almost ingrained. There have been weaknesses in that economy, and an associated lack of forex, for some time, he said. The lack of agri-exports he sees as possibly largely stemming from what he describes as: The perceived threat of El Nino.
This comes from planters not actually having risked the cost of planting for the new season - because they expected a drought. Whether one comes or not doesn't make any difference under these circumstances, Bonnet said. The expectation of it has had the same effect anyway.
He also felt that many of the neighbouring countries - and competitors of Malawi - were more pro-active in the way they dealt with the threat of the drought.
These squeezes are very important for a small economy like Malawi's, Bonnett said.
The causes of the Malawian ailment he sees coming from three primary areas:
¥ Institutional weaknesses. For example, this dependence on agricultural output, said Bonnet;
¥ The restructuring of African national economies demanded by the World Bank, the International Monetary Fund (IMF) and other international aid donors. Malawi has not gained much comparative strength from its exercises to offer to incoming investors and donors, Bonnet said;
¥ Trying to right the ills of the past has been costly. The attempts to upgrade the country's infrastructure - which had suffered from past neglect - have made a very damaging demand on the economy, said Bonnett, and one which it could really little afford.