Why South Africa Won’t Intervene in Zimbabwe’s Worsening Political and Economic Crisis (The Financial Mail – October 28)

Political parties in Zimbabwe are seething over SA’s mellow response to its political and economic crisis, which they say is spiralling out of control.

Sparking the latest fallout were recent comments made by international relations & co-operation minister Maite Nkoana-Mashabane, who downplayed the country’s predicament.

"[Isaac Moyo, the Zimbabwean ambassador to SA] presented a picture which doesn’t talk to the crisis you are alluding to and [said] that all is under control," she told a journalist at a press conference in Pretoria last month.

Nelson Chamisa, one of three vice-presidents in the country’s largest opposition party, the Movement for Democratic Change (MDC) is fuming at what he sees as the failure by SA to understand the depth of the problems Zimbabwe faces.

"The SA government needs to know that [Zanu-PF] is a liberation party gone rogue," Chamisa tells the Financial Mail. "It had energy to create this crisis, but now does not have the same level of energy to find a solution."

Protests have erupted across the country almost weekly since July. A month-long ban on protests has ended, and opposition parties are regrouping for a fresh round of demonstrations.

The People’s Democratic Party’s Jacob Mafume says SA’s handling of the Zimbabwean crisis has been "pathetic".

Political observers are of the view that SA can’t afford to underestimate events in the country, which have a ripple effect on its own economy.

"To some extent a crisis in Zimbabwe also translates to a crisis in SA," explains Lusaka-based journalist and commentator Vusumuzi Sifile Sibanda.

For over a decade Zimbabwe’s economic ruin has been a double-edged sword for SA. Pretoria has tried to balance politics with its economic interests. Yet some believe the never-ending twists and turns can be partly explained by the "quiet diplomacy" policy adopted by former SA president Thabo Mbeki.

Mbeki stood on the periphery when Zimbabwe imploded in 2008 — the height of its collapse was marked by violent elections and hyperinflation.

Mbeki’s quiet diplomacyappears to inform the current administration’s position, says Piers Pigou, Southern Africa director for the International Crisis Group, a Brussels-based think-tank.

"It seems to reflect a more general reluctance to get involved and a genuine sensitivity around notions of interference and sovereignty. But options for shoring up stability [in Zimbabwe] ... by throwing money at the problem appear to have dried up ... The pain looks set to continue," he says.

The instability in Zimbabwe, Pigou adds, increases the chances of more people fleeing to SA in search of a better life. SA is already home to an estimated 3m Zimbabwean nationals, according to independent estimates.

Jeffrey Smith, executive director of the nonprofit Vanguard Africa Movement, believes that as Zimbabwe’s economy slides further, SA will have to brace itself for more. "That nearly one-fourth of Zimbabwe’s population has left the country in recent years has calamitous consequences. One must look no further than the xenophobic violence often directed at Zimbabweans in townships and neighbourhoods in SA," Smith says.

While SA’s decision to take a step back on the political front has attracted criticism, this is just half the story. From retail to tourism, agriculture, aviation, energy, financial services, clothing and mining , SA’s reach into what is left of Zimbabwe’s economy is deep.

Davison Norupiri, the president of the Zimbabwe National Chamber of Commerce, sees the dominance of SA businesses in the country as a signal that Zimbabwe is still a viable investment destination. He doesn’t agree with the argument that SA has exploited its neighbour’s weakness to benefit its own industry.

"I think it’s a good trend and it is proof that people can still do business in Zimbabwe. The fact that SA businesses are doing business to such a large extent shows that they still see a brighter Zimbabwe emerging. That is why they are hanging around," Norupiri says.

SA is Zimbabwe’s largest trade partner in the Southern African region. Trade between the two countries reached R25bn last year. Zimbabwe imports nearly 70% of all its goods from SA. In 2013, Zimbabwe finance minister Patrick Chinamasa said the country had been turned into a "supermarket" for SA goods. Compounding that view is the presence of Pick n Pay, which has a 49% stake in TM Supermarkets and operates 58 stores in the country. An aggressive expansion plan has given Pick n Pay the second-biggest market share.

Further boosting Zimbabwe’s attractiveness is that the rand is legal tender in the country.

SA provides the largest source market for the tourism sector in Zimbabwe. According to the latest figures from the Zimbabwe Tourism Authority, 33,009 tourists visited Zimbabwe from SA in the first quarter of this year.

SA Airways flies to three destinations in the country : Harare, Bulawayo and Victoria Falls. It has nearly 30% of the market, according to the Civil Aviation Authority of Zimbabwe.

To keep the lights on, Zimbabwe buys 300MW of electricity from Eskom, to the value of about R85m.

Zimbabweans also favour international banks to keep their money safe . Several SA banks operate in Zimbabwe, including MBCA , a unit of Nedbank; Stanbic, owned by Standard Bank; and Ecobank, in which Nedbank has a 20% stake.

In the clothing segment, Edgars, Truworths and Jet stores are in competition with cheap imports from China and secondhand clothes from Mozambique.

In the mining sector, platinum and gold production is controlled by firms that have strong SA links. Zimplats, a unit of Impala Platinum, is the largest platinum miner in Zimbabwe. Metallon Gold is owned by SA mining magnate Mzi Khumalo and is Zimbabwe’s largest gold-mining company.

Authorities in Zimbabwe believe SA has cashed in on its weak economy, and trade is lopsided in favour of SA. Attempts to redress this have been met with resistance from SA.

Zimbabwe in July attracted scorn when it imposed restrictions on imports. The new law bars imports of 43 products.

The backlash from SA is a signal that SA business won’t ease its grip on the Zimbabwean economy without putting up a fight.

Norupiri believes SA must work with Zimbabwe to help its economy back onto its feet, rather than fight against its efforts.