Mugabe talks up commerce with SA

ZIMBABWEAN President Robert Mugabe spent much of his state visit this week imploring South Africa to strengthen trade links with its struggling northern neighbour.

Mugabe deferred to President Jacob Zuma as the more advanced “elder brother”, reflecting the economic imbalance between the countries. Bilateral trade totalled R26.8-billion last year, but this is heavily skewed. South Africa exported R24.8-billion worth of goods to Zimbabwe, and imported Zimbabwean products worth just R2-billion.

Although Zimbabwe’s economy is struggling — growing 3.1% last year off a very low base after it shrank 40% from 2000 to 2009 — it remains an important end-point for local goods. Trade between the two countries has grown 80% in recent years.

Simon Freemantle, the head of the African political economy unit at Standard Bank, says Zimbabwe is an important commercial partner, despite its lacklustre mance.

This week, the countries set up a binational commission to boost trade, which will be chaired by Mugabe and Zuma. The two presidents also signed trade deals.

Zuma said: “Our desire is that both countries should have an economy as well as trade that favours both countries.”

The reality, however, is that South Africa has been by far the biggest beneficiary of trade.

SA Reserve Bank figures show that some South Africans see business and investment opportunities in the struggling country. At the end of 2012, the figures show, South African investors directly held R11.2billion worth of shares listed on the Zimbabwe exchange, up from just R2.9-billion in 2007.

South African companies still operate in Zimbabwe despite its indigenisation programme, which forces foreign companies to give up 51% of their business to Zimbabweans. These companies include Impala Platinum, Anglo American Plat-

economic

perfor- STATE AFFAIR: President Robert Mugabe and President Jacob Zuma inum, Standard Bank, Nedbank and Pick n Pay.

Others have fled, including retailer Massmart, which left Zimbabwe in 2012, when it was required to give up 51% of its business there.

In hindsight, this may not have been the best decision. Its rival, Pick n Pay, went the opposite route, hiking its shareholding in TM Supermarkets from 24% to 49%. TM Supermarkets now operates 54 shops in Zimbabwe, nine of them Pick n Pay-branded stores.

When Absa, now known as Barclays Africa Group, bought Barclays’s African operations in 2012, it opted not to buy the Egyptian and Zimbabwean units due to the conditions in those countries at the time. This position has not changed.

However, Barclays Africa reiterated last month that it remained interested in buying these businesses from its British parent, “at an appropriate price” and when the economic and political situation in these countries stabilised. This week, the bank said it would continue to manage these businesses on behalf of its parent.

Standard Bank’s unit in Zimbabwe, Stanbic Bank, employs nearly 650 people and has 20 branches. The group dodged questions on the challenges it faced and the costs of running the unit, but said Stanbic was a “sound bank [with] a strong board and an excellent management team”.

Alice Lourens, the corporate relations manager for Impala Platinum, would not be drawn on the significance of Mugabe’s first state visit to South Africa in 21 years. Instead, she said the group’s key focus was to sustain profitability at its Zimplats unit as best it could by managing costs and optimising output.

“We continue to advance the commissioning of the base metal refinery at Zimplats, but the imposition by the government of a 15% value-added tax on unbeneficiated platinum remains a huge concern for Mimosa operations as it materially impacts profitability.”

Stronger metal prices and policy certainty would, she said, greatly assist “our ability to sustain our operations and thereby safeguard employment”.

The jury is still out on whether Mugabe’s visit will result in a relaxation of red tape and regulations for South African companies operating in Zimbabwe.