DURING his state visit to South Africa recently President Robert Mugabe painted a gloomy picture of the state of Zimbabwe’s economy to his South African counterpart Jacob Zuma, as the country reached a milestone 35 years of Independence, it has emerged.
Mugabe visited Pretoria for talks on a wide range of issues, including trade and migration.
In meetings with Zuma, South African ministers and senior government officials held in Pretoria, Mugabe was to the amazement of his hosts candid on the state of the economy, which he said was in dire straits.
Top South African and Zimbabwean sources, who attended the meetings in South Africa said Mugabe painted a “very bleak” picture of the economy, shocking Zuma and his ministers who had apparently underestimated the severity of the economic crisis.
Mugabe reportedly spoke on company closures, massive retrenchments, high unemployment and the liquidity crunch suffocating economic activity in the country. Zimbabwe is currently battling an obdurate economic crisis now in its second decade.
According to Finance minister Patrick Chinamasa in his budget statement last year in November, more than 4 600 companies had closed shop since 2011, resulting in more than 55 400 people losing jobs.
Statistics presented by Chinamasa showed that the tourism sector was the hardest hit with 2 142 companies closing during the three-year period with 18 413 jobs lost as a result. In the manufacturing sector, 458 companies closed with 9 978 jobs lost during the same period.
The construction sector was not spared with 317 companies closing shop during that period resulting in the loss of 3 651 jobs, while 368 companies in the agricultural sector closed down affecting 5 465 jobs.
Officials who attended the closed door meetings said Mugabe admitted that his country’s economy is in a sorry state and pleaded with South Africa to help where it can, especially in increasing investments to Zimbabwe.
Sources said on the morning of Mugabe’s second day in South Africa he had a tete-a-tete with Zuma where he virtually admitted failure.
The meeting lasted for about 45 minutes before they joined selected ministers from their countries and chaired a three-hour long private meeting where Mugabe and some of his ministers gave a briefing of the state of affairs in Zimbabwe, especially the resurgent economic crisis.
Selected ministries who attended the private meeting for both countries included Foreign Affairs, Home Affairs, Defence, South Africa’s Industry and Trade and Zimbabwe’s Industry and Commerce, Water and Sanitation, Environment, Small to Medium Enterprises and South Africa’s ministry of Communications which was assigned to accompany Mugabe during his state visit.
“After the two leaders met they then joined ministers at a meeting which was closed to the media and that is where the real stuff was discussed.
President Mugabe outlined the challenges his country is facing, with Chinamasa weighing in,” said a Zimbabwean official who attended the closed meeting.
“Mugabe talked about company closures and the collapse of his once vibrant industrial sector, as well as the liquidity crunch the country is currently facing.”
A South African government official said: “South Africa has of course always been aware of the state of Zimbabwe’s economic problems but had underestimated the extent to which the situation has deteriorated.
“Mugabe’s briefing to Zuma and ministers on the dismal state of the economy left no doubt that Zimbabwe’s economy was in a crisis and the country badly needs assistance to turn things around. We were quite surprised that Mugabe himself admitted this.”
Mugabe and Chinamasa called on the South Africa government to urge development financial institutions to increase their investment in Zimbabwe, particularly the Development Bank of Southern Africa (DBSA) and Industrial Development Corporation South Africa.
In the meeting Chinamasa appealed to the South Africa government to urge its financial institutions to lower interest rates on credit lines as Zimbabwe is broke.
“South Africa understands Zimbabwe’s situation unlike the international community; you are our brothers therefore we ask that when your companies advance funds to Zimbabwean companies you charge lower interest rates,” Chinamasa reportedly pleaded.
Sources also said during their meeting Mugabe and Zuma tackled trade issues with Industry and Trade ministers tasked with settling disputes.
Zimbabwe raised charges on imports from South Africa in August 2014, allegedly without following protocol of consulting Sadc first.
“Rob Davies (SA minister of Industry and Trade) and Mike Bimha (Zimbabwe’s Industry and Commerce) were called in that meeting to resolve the issue of surcharges on imports and they were given a deadline to sort the issue out by following the Sadc protocol, hence the matter is being dealt with by the two ministers,” said a government official.
Zimbabwe also asked Zuma’s government to consider receiving pharmaceuticals from Zimbabwe via the Beitbridge border post, not by air.
South Africa, the region’s dominant economy, has many companies involved in important projects and operating in the country.