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Zimbabwe industry feels impact of SA protests

by Staff reporter
18 Jul 2021 at 07:57hrs | Views
Businesses and consumers have already begun feeling the contagion effect of the country's heavy dependency on South Africa after the unrest that plagued the rainbow nation last week over the incarceration of the country's former president Jacob Zuma, disrupted critical supply chains.

United Refineries chief executive officer Mr Busisa Moyo said their supplies from South Africa have already been cut.

"This is a serious issue for us in Zimbabwe, in particular that the N3 and Durban Port are key nodes to Zimbabwean businesses; even what we import from further afield comes through Durban Port and comes along the N1 and N3 highways," he said during Zimbabwe Television Network (ZTN)'s programme "The Chase".

"This has a major impact and we have already received notices from suppliers based in Durban and other parts of South Africa that they are unable to move critical raw materials.

"From what we are seeing from our suppliers, and we have been talking with them since the beginning of the week, it's quite clear that the situation has been deteriorating."

The Durban Richards Bay ports are some of the major ports used by importers as gateways to the outside world.

But perhaps even more critically, South Africa is Zimbabwe's biggest trading partner.

According to a recent Confederation of Zimbabwe Industries (CZI) report titled "Raw Material Import Exposure for Zimbabwean Industries", 80 percent of local companies in agriculture and horticulture source their raw materials from South Africa.

And in terms of the quantum of raw materials used by players in these sectors, 73 percent were imported, while the balance (27 percent) are procured locally.

The report shows that the neighbouring country is the major source of imported raw materials for local tobacco and beverage producers, although imported raw materials account for 35 percent of their requirements.

Local companies with South African parentage are also likely to be among the worst affected.

Last week, a number of Pick n' Pay supermarkets were limiting the amount of imported products customers could purchase.

South African energy firm, Puma Energy South Africa, which has operations in Zimbabwe, announced earlier last week that "all our suppliers as well as our Richards Bay terminal have stopped supply and transporters have grounded their vehicles".

Mr Moyo added: "This is coming on the back of Covid-19, where we were trying to recover lost ground in 2020, so this just exacerbates the economic situation regarding industry. And I would say Zimbabwe is just a prototype, Zambia is probably in the same situation, Malawi, as well as other neighbouring countries."

International lawyer Brian Kagoro told The Chase that the effects of the South African situation on Zimbabwe and the SADC region could be extensive and multi-layered.

"The economic impact is, firstly, two-fold. We are focused on the imports, but we need to concentrate on what we export through South Africa. What we are unable to move out of Zimbabwe for earning income is significant.

"There is a third dimension, which is what is being illicitly transacted during this time of chaos and what opportunities are being created for criminal networks and bypassing the accountability of the State for both South Africa and SADC," he said.

"I think the biggest impact on SADC will also be the fourth dimension, which is Diaspora remittances. When you say the factories, the warehouses and health facilities are being burnt down, we are talking about South African jobs, but we are also talking about jobs for SADC folks. Reconstruction will take time, it means those people who were employed in those sectors have lost sources of income."

South Africa's crippling protests have again highlighted the need for Zimbabwe and SADC to boost and diversify manufacturing output, as well as expand its import and export markets.

"We have to get serious about South African dependency. It could present regional contagion and we should do all we can to localise raw material production," said Mr Moyo.

"That has been a programme, but these programmes take time, and this should jolt us into action to localise and to make sure that as a region we balance our dependence on a single economy."

Source - sundaymail
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