SA’s new GNU: Will it affect trade with Zim?

Oliver Kazunga

ECONOMIC observers hold divergent views on how the long-standing cordial trade relations between Zimbabwe and South Africa before the newly formed Government of National Unity (GNU), will be impacted.

Since 1994 when South Africa attained independence under the African National Congress (ANC), the two southern African countries have enjoyed cordial economic and political relations, underpinned by the fact that ANC and Zanu PF in Zimbabwe, are both revolutionary parties that share almost same ideologies.

There are also reports that Zimbabwe delayed it’s hugely successful land reform programme until South Africa attained majority rule in 1994 as it was discovered that the whites in South Africa would have declined to let the country for fear of a replica of the developments in Zimbabwe.

And at a time when Zimbabwe embarked on a drive to rebuild the economy and revive industries, the local manufacturing sector has largely depended on South Africa for raw material supply and capital equipment to retool.

Zimbabwe has also been importing basic commodities from South Africa because capacity utilisation in the local manufacturing sector was subdued and the net effect was incapacity to meet local demand.

At the height of hyperinflation in 2008, capacity utilisation in Zimbabwe’s manufacturing sector averaged 10 percent compelling the country to become a net importer of products such as food items, clothing and footwear, among others mainly from South Africa and the world over.

However, capacity utilisation in Zimbabwe’s manufacturing sector has in recent years been improving with the Confederation of Zimbabwe Industries, reporting that last year capacity utilisation stood at 53,2 percent compared to 56,1 percent in 2022.

According to data from the Zimbabwe National Statistics Agency (ZimStat), the country witnessed a remarkable surge in exports in the first quarter of this year to reach US$1,72 billion reflecting a 25 percent increase from US$1,38 billion in the corresponding period in 2023.

Exports of manufactured goods or value-added products increased by 55 percent to US$119,2 million in the first quarter of this year from US$76,7 million recorded in the same period in 2023.

Although imports from South Africa increased by seven percent to US$2,14 billion during the period under review, the trade deficit stood at US$420 million which is a 32 percent decrease when compared to a deficit of US$623 million recorded during the same period last year.

The recent birth of the GNU in South Africa after a coalition between ANC and the Democratic Alliance (DA)— an opposition political party which does not share a similar ideology with either ANC or Zanu PF, generates debate around how the two countries’ trade relations would be impacted.

In an interview yesterday, economic commentator Eddie Cross said it was difficult to know how trade and investment relations between Zimbabwe and South Africa will be impacted by the GNU as it is too early to make an assessment.

“We do not even know what the final policy position of the new Government is going to be.

“We have some indication, in the sense that the ANC has spelt out what they want the policy position to be, but they are no longer completely in charge, and they will have to consult their partners in the GNU before final policy positions are adopted,” he said.

Cross added that the GNU is likely to stabilise South Africa and this might even lead to a resumption in economic growth in South Africa, and that would be of tremendous benefit to Zimbabwe because the neighbouring country is the largest economy in the region.

“And whatever happens in South Africa automatically benefits us and the fact that they have had very low growth rates now for a number of years, with all sorts of problems, inflation, disinvestment.

“I think the GNU might restore confidence in the business community and this might result in increased investment and growth — overall it is good news for us.”

Ideologically, he said the liberation movements in Southern Africa will all be asking the question, how did this happen to one of their parties when most of the other liberation movements in the region are maintaining their grip on power.

“I think there will be questions asked about that but it is quite clear that the ANC has accepted the outcome of the election and is proceeding on that basis. And I think this can only be good for South Africa itself,” said Cross.

The Zimbabwe National Chamber of Commerce (ZNCC) past president, Trust Chikohora, said the DA has a negative policy towards the current Zimbabwe Government while the ANC has a positive policy towards Zimbabwe.

“Now it appears that the foreign policy of South Africa may need to be a compromised position which means that they may be cut back in terms of the association with Zimbabwe and support for Zimbabwe.

“So, there may be some foreign policy implications of the new GNU, which may be averse to Zimbabwe because of the DA influence,” he said.

The GNU in South Africa was formed after elections in that country after it failed to produce an outright winner (50 percent) from the contesting political parties.

ANC garnered 40,18 percent and DA had 21,81 percent while the other political parties shared the remainder of the votes.

The GNU in South Africa, Chikohora said, could also be adversarial to capital inflows into Zimbabwe, trade and investment into the local market from that neighbouring country.

“This (GNU) may also affect capital inflows into Zimbabwe and may also affect trade inflows and outflows as well between Zimbabwe and South Africa.

“It may also affect some lines of credit which sometimes may have been probably available from South Africa in the past — now there will be more scrutiny from the DA side of the South Africa government on anything that may be perceived as of assistance to the current Zimbabwean government.

“So, it may result in economic constraint for Zimbabwe as far as our dealings with South Africa are concerned,” he said.

Another economic commentator, George Nhepera, weighed in saying from an economic point of view, Zanu-PF and ANC share a common heritage of being left-wing political parties with a strong socialist and nationalist ideology.

This, he said, is far apart from the DA which is more of a centre-right political party with economic policies that are conservative and less of State-led economic development.

“In actual fact, DA is a strong supporter of market-led and investor-friendly policies with strong economic growth, create jobs and reduce inequality.

“While they could be ‘economic tensions’ of ANC, DA and Zanu-PF during the early stages of the GNU in South Africa, there are likely to find common grounds on key matters around exchange rate stability, conservative monetary policies and investor-friendly policies which are not far apart in terms of their thinking and importance in nation building” said Nhepera.

“Where it’s inevitable that they will not ‘see eye-to-eye’ is on foreign policies especially on relations with Palestine, Israel and Russia due to their distinct political ideologies.

“DA is in support of the worldwide view supported by the majority of western countries such as the United States, the United Kingdom and European countries.

This view is to support Ukraine and Israel in their war efforts until peace is found and achieved.”
Nhepera said for the sake of progress in investment attraction, ANC should realign its foreign policies with the Western nations and the same for Zanu-PF.

“ANC and DA are fast friends, but unlikely to be firm friends due to their divergent political and foreign policy ideologies.

“Its ‘iron and clay’ being mixed together,” he said.

Nhepera added that the only thing that could affect trade relations between Zimbabwe and South Africa is the tepid approach to corruption by Zanu-PF and ANC.

“The only thing which could affect our trade relations is our ‘lukewarm approach’ to corruption within the public sector which in my view must be strengthened.

“DA is strongly anti-corruption and this should be embraced by all leaders if there are to record significant improvements on their economic growth, poverty alleviation, job creation and prosperity for all citizens,” said Nhepera.