South Africa stands accused of bully-boy tactics in trade with Zimbabwe and of dominating its economy, argues Richard Saunders in Harare
DESPITE words of assurance from Nelson Mandela during his state visit this week that tense business relations between South Africa and Zimbabwe would be smoothed in efforts to promote greater regional economic integration, business leaders here remain quietly apprehensive about the intentions of their counterparts south of the Limpopo.
Similar assurances from South African government officials in the recent past have failed to make a dent in the South African private sector’s bully-boy image. In recent years the trade and investment imbalances have widened in Pretoria’s favour, as South African producers have muscled into the Zimbabwean domestic markets through aggressive trading and franchising.
In 1990 South Africa supplied 20% of Zimbabwe’s imports; by last year this had grown to 38%. In the first 10 months of 1996 this resulted in a trade gap of more than R3,2-billion, on total South African exports to Zimbabwe of R4,2-billion. In 1990, the gap was only R570,88-million.
The same pattern applies to most of South Africa’s neighbours.
Evidence of this new, skewed economic relationship with South Africa is found in every supermarket and mall in the more affluent areas of Zimbabwe’s cities.
First came the commodities which used to appear as regulars on shopping lists for visits south by middle-class Zimbabweans: Cape wines, imported whiskies, chocolate biscuits, VCRs and other “luxury” items rarely found in Zimbabwe. Then came the whole store.
In recent years there has been a proliferation of South African chains, like Nandos, Black Steer, Saddles and even an offshoot of the Keg chain, which now litter the suburban landscape along with newly hatched local copycat enterprises offering big-screen M-Net sports and canned Castles imported from South Africa. More recently Clicks arrived on the scene, soon to be followed by Pick ‘n Pay.
Such operations are typically operated by Zimbabweans under licensing and franchising agreements, but represent continuing sources of income for parent companies south of the border. Those special brand- name herbs and spices, shampoos and plastic wrapping are all shipped in from South Africa.
The cultural triumphalism heralded by this in-your-face influx of foreign icons is disturbing enough, erasing in a few short years much of what was distinctive and attractive about the social space of late- 1980s Harare and replacing it with faceless, plastified watering holes for wealthy wannabe white Gen-Xers and newly affluent indigenous business people.
But of greater concern is South Africa’s underlying, growing economic domination of the Zimbabwean and regional economy.
In this regard, fast-food chains and canned Castles are merely the tip of the iceberg.
All of this entails very little direct, employment-creating investment by South African capital, despite broad promises by business promotion spin-doctors of South African’s contribution to regional economic expansion.
Rather, according to Edmore Tobaiwa, chief economist at the Zimbabwe National Chamber of Commerce (ZNCC), South African businesses have preferred to invest at home in new technologies for export production to overseas markets, while milking the regional market through the retailing of tried and tested – others might say staid and stale – domestic goods.
Zimbawe’s relatively large and high- spending economy, and its status as South Africa’s most important trading partner in Africa, have made it a primary target for South African producers aiming to extend their markets further afield. They have been substantially assisted by Zimbabwe’s 1990s World Bank-inspired economic reform programme, which reduced tariffs and loosened foreign exchange and investment controls.
The result was a massive influx in the early 1990s of cheap South African products, aided in many instances by South African government export incentives. Many local producers were soon pushed to the brink of collapse, and perhaps as many as 50 000 formal sector jobs were lost, according to estimates by the Zimbabwe Congress of Trade Unions.
Though many other factors, including drought and structural weaknesses in the Zimbabwean productive sector, contributed to this economic shake-out, local business leaders point to the South African government and private sector as having effectively exploited and worsened the situation.
In 1992, Zimbabwe lost its preferential trade status with South Africa on expiry of a 1964 agreement between the white minority regimes in Salisbury and Pretoria. Duties on Zimbabwean imports skyrocketed, typically to more than 80%. Zimbabwe’s competitiveness in the large and important South African market evaporated, and the trade gap between the two countries began to stretch.
As Zimbabwe took down its own protectionist barriers at the insistence of the World Bank and International Monetary Fund, South Africa dug in its heels on negotiations to remodel the trade pact.
Five years on, there is still no comprehensive trade agreement, despite the rhetoric of good intentions from Pretoria. A deal, and a cumbersome one at that, has only been struck for clothing and textiles. South Africa jacked up duties on clothing and textiles, effectively stifling the industry.
All new imports from Zimbabwe to South Africa attract a higher, non-preferential duty.
Key agreements on agriculture, chemicals, pharmaceuticals and other items seem a distant prospect, and there have been simmering calls for “retaliation” and “countervailing measures” against South African producers.
In March, the Zimbabwe government announced a new tariff regime of between 40 and 60% to offer some protection for local producers. Zimbabwean business leaders say that their South African counterparts have used the new tariffs as an excuse in applying more brakes to the trade negotiation process.
Meanwhile, South African government officials and business leaders appear more intent on pursuing trade deals with the European Union, which it sees as a more lucrative, high-value market. When it comes to trade within Southern African Developing Community (SADC), the increasing tendency has been for South Africa to nix bilateral trade agreements in preference for a much- hyped regional trade agreement.
A SADC trade protocol was signed, but has only been enacted by Mozambique. Zimbabwe and South Africa are the main hurdles to its wider enactment. However, the trade protocol will do little to effectively undermine the national trade, investment and labour market strategy developed by the dominant economy in the region and indeed wider proposals on related issues like labour migration have been scuttled at regional level.
In Zimbabwe, South Africa’s shifting trade and investment strategies have prompted an openly hostile response from business leaders. Jonee Blanchfield, president of the Confederation of Zimbabwe Industries, wrote to Brussels in July last year demanding that the EU hold off on trade concessions to South Africa in light of South Africa’s own evident failure to offer similar concessions to its own neighbours.
Others, led by the ZNCC, argue that less attention be given to cracking the South African market, and more to enhancing competitiveness within the national market and developing trade with both smaller regional neighbours and overseas partners.
None of this response from South Africa’s major trading partner in the region seems to point to the increasing regional co- operation and integration which is now being peddled at home and abroad by the born-again regionalists in Pretoria.