AFTER industry’s indications that tensions between Mozambique and Islamic State belligerents might deal a blow to Zimbabwe’s ever-troubled economy, business must map out how companies will avoid a catastrophe in the event of an escalation.
There is no guarantee that confrontations in the oil-rich Cabo Delgado region will end soon.
The bandits have demonstrated their ability to sustain bloody conflicts where their concerns have not been addressed.
In Mozambique, this appetite to inflict pain and economic damage has been displayed, with over 3 000 dead since 2017, about one million displaced and uncertainties to US$5 billion worth of oil facilities.
This is why the French government has tried to manoeuvre and to rope in Zimbabwean troops, as it tries to protect its oil interests.
As the industrial sector said last week, several Sadc states including Zimbabwe would be dragged down should Mozambican markets collapse and key transportation corridors close if the crisis glides southwards. This is where Zimbabwe’s 504-km Beira-Feruka pipeline passes through, rolling in the same direction as an international highway linking the port and most of Sadc.
What immediately comes to mind is how Zimbabwe will pump up to 130 million litres of fuel through the pipeline should multiple hurdles litter this vital stretch? Sadc may deploy troops — about 3 000 of these have been recommended. But how will global markets react to sending vital merchandise, raw materials and equipment through a troubled corridor? Trade might continue through Mozambican ports, but this will mean added costs and higher insurance premiums, with a huge bearing on the cost of doing business in Zimbabwe.
In addition, if power imports from Mozambique’s Hidroelectrica de Cahora Bassa are compromised, mines and industries will be hit by relentless blackouts. There is a glimmer of hope on the power front, however. After bringing on line fresh capacity at Kariba in 2018 through its US$550 million investment, Zimbabwe has invested a further US$1,5 billion to rebuild the thermal facility at Hwange.
This means by the end of next year, Zimbabwe could see improved internal supply. But surely, based on the red flags raised by industry, a sustainable strategic rethink is long overdue.
Companies must roll out plans for alternative routes with key actors in international trade and politics involved.
Should the Confederation of Zimbabwe Industries’ plea end in mere talk, companies now know what happens when conflicts disturb markets. Developments in South Africa in the past few weeks should serve as a wakeup call. But it is good to see industries at the forefront campaigning for a review of international trade networks.
In South Africa, key trade routes were closed, raw material supplies were affected and export destinations nearly collapsed.
But in refocusing trade links, this is an adventure that business cannot plan alone. The good thing is, when Frederick Shava was appointed Foreign Affairs and International National Trade minister early this year, his most immediate call was to diversify exports, which means there is political will.