OWN CORRESPONDENT, Johannesburg | Wednesday 7.00pm.
SOUTH Africa’s chamber of business (Sacob) on Wednesday cautioned its members against investing in neighbouring Zimbabwe while that country’s political crisis heightens.
“South African traders and investors would do well to stay out of Zimbabwe for the time being. Zimbabwe’s political climate makes investing there risky,” Sacob chief executive Kevin Wakeford said.
“Already, Zimbabwe’s property rights are being withdrawn. One does not know what will happen next,” he said.
Zimbabwean government supporters led by nationalist war veterans have seized hundreds of white-owned farms in the country with the tacit approval of embattled President Robert Mugabe.
Mugabe faces increasing opposition at home as the Zimbabwean economy, the second largest in southern Africa, deteriorates in response to cuts in donor aid effected over governance concerns.
Wakeford said the resultant hard currency shortage had forced the country’s private sector to withdraw insurance cover on exports.
“Among others forms of cover, political rights cover and credit guarantee cover have been withdrawn. This really exposes investors’ assets,” he said.
Moreover, Zimbabwe’s economic hardships could see a significant drop in South Africa’s export volumes this year.
The balance of trade between the two countries has traditionally been in South Africa’s favour: in 1998, its total exports to Zimbabwe amounted to R5,5-billion ($0.84-billion ), compared to imports amounting to R2,5-billion.
“However, the biggest impact for us is the effect that Zimbabwe’s political crisis is having on foreign perceptions of the region, which could lead to capital flight,” Wakeford said.
International investors often looked at Africa as one entity, rather than a group of countries with different political and economic conditions, he said. — AFP