Now that Zimbabwe has a new president who has made economic revival a priority in his first speeches, the scenario that will be played out by the management teams and boards of companies doing business with Zimbabwe will be “what if?” a crocodile can change its spots. That mangled metaphor roughly sums up the opinions of commentators – no one apart from the new president and former Mugabe right hand man Emmerson Mnangagwa knows what plans he had in mind when he said in his inaugural speech “as we focus on recovering our economy, we must shed misbehaviours and acts of indiscipline which have characterised the past. Acts of corruption must stop forthwith”. What the coming months will also reveal is whether Mnangagwa will be allowed by the military to do what is needed to get the Zimbabwean economy back on track. At stake for South Africa is trade worth more than US$6 billion a year that supports an extensive network of freight and logistics companies. In 2016, South Africa’s exports to Zimbabwe were valued at around R29.3 billion ($2 bn) and imports R2.25bn ($160 m). These volumes could grow exponentially if there is economic revival in Zimbabwe. Rebuilding the economy from the ground up will take reinvestment in all sectors and the creation of thousands of jobs. Durban will be competing against Beira and Maputo for a share of the project cargo, fast moving consumer goods and machinery. Zimbabwe is also a corridor for valuable trade with Zambia and the DRC. Zambian imports from South Africa totalled $2.67 billion in 2016 and imports $463 m – with the bulk moving by road through Zimbabwe. South African exports to the Democratic Republic of Congo (DRC) totalled $896m and imports from the country $91 million in 2016. If the political conditions in Zimbabwe make it unsafe to travel through the country then the alternative route through Botswana means delays at the Kazungula ferry until the new bridge over the Zambezi River is completed around 2019. Economic revival in Zimbabwe could happen far faster than would normally be the case for a country facing the challenges it has. The country still outperforms 39 countries around the world, according to the Economic Complexity Index (ECI). It is the 83rd largest export economy, the 85th largest importer and the 78th most complex economy out of the 124 that are ranked by the ECI. This puts it ahead of the likes of Pakistan, Ethiopia, Botswana and the Netherlands. The index measures the knowledge intensity of the products a country exports. South Africa is ranked 49th. In 2016, Zimbabwe exported products and services worth $2.83 billion and imported $5.2 bn, resulting in a negative trade balance of $2.37bn. Imports into Zimbabwe dropped from $6.64b in 2011 to $5.2bn in 2016. Zimbabwe’s top exports were raw tobacco ($887m), gold ($850m), nickel ore ($293m), ferroalloys ($119m) and diamonds ($118m). The top export destinations are South Africa ($2.25b), Mozambique ($267m), the United Arab Emirates ($116m), Zambia ($72.2m) and Belgium ($45.7m). The leading exporters to Zimbabwe are South Africa (US$2b), China (US$387m), India ($116m), Mexico ($59.3m) and Botswana ($50.6m). There are over 120 South African companies doing business in Zimbabwe in sectors ranging from fast food to mining. They could be well positioned if the new president can reverse the policies that led to the flight of foreign investment – policies that he was party to developing and implementing.
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