South Africa’s Trade and Industry Minister Rob Davies says a weak Zimbabwe is bad news for South Africa because if Zimbabwe has a meltdown large numbers of people will find their way in South Africa.
South Africa already hosts anything up to three million Zimbabweans some of whom have been victims of xenophobic attacks as South African accuse them of robbing them of their jobs.
Davies told The Africa Report that he was keeping a close eye on Zimbabwe and was part of the high-powered delegation led by President Cyril Ramaphosa to Zimbabwe early this month to discuss trade ties.
Trade between the two countries is tilted in favour of South Africa, which exported goods worth more than R30.8bn to Zimbabwe in 2018, according to figures released by the presidency.
Zimbabwe’s exports to South Africa were worth just R3.6bn.
Addressing the third session of the Zimbabwe-South Africa Bi-National Commission in Harare, Zimbabwe’s Foreign Affairs Minister Sibusiso Moyo said a weaker Zimbabwe was a threat to South Africa’s economy.
“A prosperous Zimbabwe makes for a prosperous South Africa and vice-versa,” Moyo said.
Economists point out that South Africa’s economy was previously hit in the early 2000s when contagion from events in Zimbabwe heightened risk aversion among investors – both local and foreign.
Davies said: “I think that point is pretty well established, that if our neighbour has a meltdown – or even short of a meltdown, if it has a worse performance in its economy than now – we can expect that large numbers of people from Zimbabwe will find their way into South Africa. […] Another implication is a loss of markets – all kinds of things that we do not want to see. We have to find ways that we can work to assist Zimbabweans as they are now trying to take decisions which are going to turn their economy around. And we need to find ways to help them.”
On South Africa providing a financial bail-out for Zimbabwe, Davies said: “I don’t think this is a question of somebody bailing out somebody with large sums of money. We don’t have large sums of money, but I think we can try to assist them in their engagements with the Paris Club [including countries like Russia, Britain and France], which is a creditor, and also with international financial institutions.”
He also said Zimbabwe should have its own currency because using the United States dollar was uncompetitive
“If you are tied to the currency of the strongest economy in the world, you’re not going to be competitive on anything. So it’s obviously important that they do introduce a currency, but it’s having issues,” Davies says.
“There are many issues about certainty. Something I shared with them is that investors respond when you can introduce certainty – if you keep chopping and changing, you are going to get less of a positive reaction.”
Davies said he believes that Zimbabwe’s President Emmerson Mnangagwa and his team are trying to do a number of things that are moving to the right direction: “They need to be encouraged to do that, and I’ll support it where we can.”-The Africa Report
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