Analysts believe Zimbabwe has the capacity to turn around the trade deficit with South Africa if it can revive its manufacturing sector and start producing more goods.
Mail and Guardian Africa
Still, the numerous Zimbabweans working in South Africa can be regarded as a form of “export” to South Africa.
South Africa is benefitting from the skills flight from its neighbour; it is estimated some 2 million Zimbabweans have sought economic refuge in South Africa where a significant number is employed in the formal sector.
“A number of Zimbabwean professionals in the medical, banking, academic and engineering disciplines are becoming a household name in our southern neighbour. To us we see it as an opportunity for brain gain contrary to the traditional perception where bureaucrats used to view it as a loss,” said Zimbabwe National Chamber of Commerce (ZNCC) of Commerce President Davy Norupiri at the Trade and Investment Forum organised by Mail and Guardian Africa in Johannesburg, South Africa, on Friday.
Norupiri said although the two neighbouring countries had a common and long history of regional affiliation, backed up by cultural ties, official trade balances were tilted in favour of South Africa, southern Africa’s biggest economy and the second largest in the continent after Nigeria.
“A number of measures are on the cards to try and correct the trade imbalance which currently exist between Harare and Pretoria with the move by South African companies to fund a number of infrastructure projects using a public private partnership (PPP) approach,” Nopiri told business people at the Trade and Investment Forum.
He pointed out that South African products and services were dominating 70% of Zimbabwe’s industries such as retail trade and energy.
Davy Norupiri, president of Zimbabwe National Chamber of Commerce (ZNCC).
“The competitive edge that South Africa companies possess against Zimbabwe is directly linked to the weakening of the South African rand against the US dollar which, is the dominant currency in Zimbabwe following dollarisation,” said Norupiri, adding was working tirelessly to ensure win-win trade between the two countries regardless of the weaker South African Rand against the greenback.
“South Africa has remained a destination of choice for Zimbabwe professionals with about 72% of Diaspora remittances directly emanating from Zimbabweans resident in South Africa. This is no mean feat given that about 25% of the liquidity sources within the economy are from the Diaspora which is only second to export proceeds,” he added.
“It is in the interest of us as a chamber of commerce (ZNCC) to see to it that sustainable trade measures are implemented to achieve a win-win scenario in as far as trade between the two countries is concerned,” said the ZNCC executive.
Zimbabwe’s other major regional trading partners include Botswana and Zambia but South Africa boasts the retail muscle backed by a vibrant manufacturing industry.
Amid the trade imbalances between the two Southern African countries, concern has been raised regarding policies regulating Zimbabwe’s economy, particularly the controversial indigenisation legislation, which is seen by some as a stumbling block to lure investors into Zimbabwe.
Under the legislation, foreign-owned companies are compelled to cede at least a 51% share to indigenous Zimbabweans. The government insists this is necessary to correct injustices emanating from years of colonialism.
The ZNCC executive concurred that such laws needed to be explained “fully and clearly” in order to dismiss the myths being created by the piece of legislation enacted in 2008, which he concede was scaring away investors from the country.
“The bilateral investment promotion and protection agreement (BIPPAS) ratified in 2009 between Zimbabwe and South Africa allows for South African firms to be ring-fenced in their investments in Zimbabwe as the Indigenisation laws will be relaxed in quite a number of dimensions,” said Norupiri.
“This implies the greater potential for private investors from South Africa to come and invest in Zimbabwe. The mobility of labour between the two countries and Zimbabwe’s concerted effort to revise its labour laws will soon make recruiting and retrenchment a very smooth and efficient exercise,” Norupiri added.
South Africa and Zimbabwe recently elevated bilateral relations with the signing of five agreements government officials said would benefit both countries.
The agreements followed Zimbabwean President, Robert Mugabe, embarking on his first official visit to South Africa since 1994.