Independent Online

Saturday, May 21, 2022

Like us on FacebookFollow us on TwitterView weather by locationView market indicators

THE SHAKE-UP: SA, Zim joined at the hip in struggle to find their feet

BR deputy editor says Zimbabwean President Emmerson Mnangagwa last week put his country on a strong recovery path. File Photo: IOL

BR deputy editor says Zimbabwean President Emmerson Mnangagwa last week put his country on a strong recovery path. File Photo: IOL

Published Sep 12, 2018


JOHANNESBURG – Zimbabwean President Emmerson Mnangagwa last week put his country on a strong recovery path.

Mnangagwa appointed a new cabinet that had old and trusted hands in government with a mix of technocrats and young blood. He said his mission was to transform Zimbabweans into middle-income citizens within the next five years.

Story continues below Advertisement

The World Bank defines such countries as those with a gross national income per capita of $1026 (R15 500) to $12 475 (R189 132). Zimbabwe’s gross national income per capita measured $910 in 2017.

There is a personal interest in the new Mnangagwa: he wants to show the world that the man in charge is different from the one who was largely blamed for the Gukurahundi massacres that saw at least 20 000 Ndebele civilians perish at the hands of the country’s post-liberation army between 1983 and 1987.

At the time, Mnangagwa was the country’s state security minister.

He has since distanced himself from the massacre and blamed his predecessor, Robert Mugabe, and then-defence minister Sydney Sekeramayi for it.

Mnangagwa wants to sanitise himself from the killings to show the world that he is cut from a different cloth than Mugabe.

The jury is still out on whether such ambitious targets will be met within the set time frames. But what is important is the speed at which he is moving to usher-in the new era.

Story continues below Advertisement

He has appointed Oxford economist and former African Development Bank vice-president Mthuli Ncube to take charge of the country’s finances, in a clear reinforcement of his claim that Zimbabwe is open for business.

Ncube is a trusted hand in investments. He has worked with some of the world’s best financial institutions and has already pledged to get R2billion from foreign bankers to ease Zimbabwe’s shortages and has vowed to reposition the country’s moribund economy.

He has said that he will also speed up plans to arrest the spiralling debt, prioritise the payment of loans to lenders, and consider the use of the rand as an official currency.

Story continues below Advertisement

Listening to Mnangagwa and Ncube outlining their vision is refreshing. It evoks a similar emotion that engulfed South Africa’s transition from the disastrous era of former President Jacob Zuma who, like Mugabe and ol’ Rip van Winkle, refused to see the world around him had shifted significantly.

When President Cyril Ramaphosa eventually took over after nights of trying to tell Zuma it was time to go, there was much hope for South Africa.

Even the notorious Indian and British bookmakers began taking bets on how soon Bafana Bafana were going to win the African Cup of Nations again, and what Zuma’s next child would be named. Sadly, as the reality has shown, sentiment alone is not enough to change the country’s fortunes.

Story continues below Advertisement

South Africa is officially in technical recession for the first time since the 2008/2009 world financial crisis.

Just last week, Statistics SA told us that the country’s gross domestic product (GDP) fell 0.7 percent in the second quarter. In the first quarter the GDP contracted 2.6 percent.

Consumer confidence has tumbled and business sentiment has fallen to 38 points in the third quarter from a high of 45 when Ramaphosa took over.

The rand, which Zimbabwe is considering using, has also fallen from R11.50 to the dollar to below R15.

Revenue collection is expected to be slow and would in all likelihood result in a review of the country’s fiscal targets. There is a lot that still needs to be done to chart South Africa on a post-Zuma path.

Sadly, there appears to be no vision to do this. We have continued to hold on to policies that have consistently failed to ignite growth. Even the promised stimulus package is unlikely to result in long-term rescue for the economy, which is in intensive care.

Zimbabwe would do well to look just south across the Limpopo to learn that good intentions do not automatically lead to prosperity.

And that they still have Grace Mugabe, Jonathan Moyo, Patrick Zhuwao and Saviour Kasukuwere in their midst, who like our home-grown Faith Muthambis, Mosebenzi Zwanes and Des van Rooyens will do anything to sell their country to the highest bidder.

Fortunately, there is hope for the two countries. Zimbabwe’s economy is expected to grow from the structural collapse it experienced under Mugabe on the back of strong performance in agriculture, mining, electricity, and water. Real GDP growth is projected to be 1 percent in 2018 and 1.2 percent next year.

South Africa, on the other hand, is expected to recover from the weaker first half due to stronger agricultural output, consumer spending and construction.

The rand is also showing signs of life with analysts predicting that it would recover once risk-aversion abates and domestic growth improves.

Already, international ratings agency Moody’s has lifted the outlook of the country’s banking sector from negative to stable.

Zimbabwe itself is expected to swing upwards in the months to come. Its real GDP growth is projected to be 1 percent this year and and 1.2 percent in 2019 on the back of stronger performance in agriculture, mining, electricity and water.

The business climate has improved. This is a boost for both countries.

We all know that Zimbabwe is far too important to South Africa to fail.

Its failure would mean the fall of some of South Africa’s top companies, such as Standard Bank, Nedbank, Old Mutual, Pick * Pay and Impala Platinum.

Most importantly, its collapse would see another wave of one-way traffic across Beitbridge that would lead to instability and investors fleeing both countries.

It is too much a risk for either of the countries to contemplate,

Zimbabwe and South Africa are, in the words of my grandmother, okaMathetha, joined together like the tongue and the saliva.

Follow Business Report on Instagram 


Related Topics: