Expert outlines the impact of devalued Zim dollar

ALAN PEAT THE NEW devaluation of the Zimbabwe dollar – effectively knocking three zeroes off the currency – “doesn’t mean a hell of a lot” for two-way trade with SA, according to Duncan Bonnett, partner of trade data advisers, Whitehouse and Associates. “The structure of our trade with Zimbabwe has changed dramatically away from consumer goods in general to exporting what that country needs,” he told FTW, “like energy products (including oil) and basic foodstuffs.” Although generally capital equipment off-take has diminished, that’s not the case with mining equipment – especially platinum – where exports have continued to grow at a fast pace. It’s the pre-devaluation stage in Zimbabwe that has had a big effect on SA’s export aspirations, Bonnett added – telling FTW that he had read a summary which suggested that, had Zimbabwe’s currency and economy not gone into a tail spin in recent years, SA exports could have been three times what they are now. This is nothing directly to do with the devaluation, which means little in essence. “Nobody deals with Zimbabwe in Zim dollars anyway,” said Bonnett. “It all has to be in foreign currency.” But the lopping of three zeroes has had a sideways impact, he added, on Zimbabwean exports into neighbouring states, like Malawi, Zambia and Mozambique “This,” said Bonnett, “because the products that Zimbabwe manufactures are now dirt cheap. “But that’s not of major concern, certainly for SA trade with Zimbabwe.”