Despite media reports and fears that Zimbabwe’s indigenisation policy – which stipulates that Zimbabweans must own 51% of foreign-owned companies – implies that the country is not open to foreign investment, Zimbabwe is open to foreign-owned businesses, Zimbabwe President Robert Mugabe last month told a South Africa–Zimbabwe Business Forum, which took place in Pretoria.
He explained during his State visit that Zimbabwe’s beneficiation and indigenisation policies were in place not to hinder foreign investment but to ensure that Zimbabweans benefited from business opportunities in the country. Mugabe reiterated that African governments beneficiate resources to improve the lives of their citizens.
Mugabe and a delegation of Ministers and businesspeople spent two days in South Africa and discussed ways in which the two countries could develop their business partnerships.
Mugabe and South Africa President Jacob Zuma signed five bilateral agreements to bolster trade and business between the two countries.
“We are starting steps that will be improved upon in the future, but we are glad that we have signed a landmark deal by which we reinforce the framework between our countries.
“Work is under way to improve the ease of doing business in Zimbabwe and we are intensively working towards improving the investment climate. Contrary to media reports, security of investment in Zimbabwe is guaranteed by law and in practice,” stated Mugabe.
The agreements include a Binational Commission (BNC) Agreement; a Memorandum of Understanding on Diplomatic Consultations; an Agreement on Cooperation on Water Resources Management, with the formation of a Joint Water Commission to enhance cooperation in water resources planning; an agreement regarding mutual assistance between customs administrations, which will further cooperation towards the establishment of a one-stop border post; and a Memorandum of Understanding on Trade Cooperation.
The BNC Agreement requires Zuma and Mugabe, who head the commission, to meet at least once a year to assess the progress that has been made.
Zuma told the forum that Zimbabwe and South Africa trade more with each other than with other countries in Africa, adding that foreign direct investment by South Africa into Zimbabwe from 2003 to 2013 totalled R12.8-billion. He added that this created about 2 485 employment opportunities in Zimbabwe.
Further, from 2005 to 2014, South Africa’s exports to Zimbabwe increased by 247%, from R7.1-billion to R24.8-billion. In the same period, Zimbabwe’s exports to South Africa dropped by 54.7%, from R4.4-billion in 2005 to R2-billion in 2014.
South Africa exports machinery, electrical equipment, mechanical appliances, chemical products, base metals, mineral products and agroprocessed products to Zimbabwe, while Zimbabwe exports textiles, pearls, precious and semiprecious stones, as well as base metals and mineral products, to South Africa.
South African companies in the mining, tourism, agriculture, banking and retail sectors operated in Zimbabwe, Zuma stated, adding that “opportunities for deeper economic cooperation between the two countries still existed in these sectors, as well as in the water, energy, infrastructure development, transport, and information and communication technology sectors”.
Call for Intra-Africa Trade
The two leaders emphasised that continental growth lay in African countries’ developing and strengthening channels to trade with one another. Zuma added that this would help the continent to prosper, despite a challenging global economy.
“An integrated Africa has a potential market of $2.6-trillion. A prosperous and growing African economy is good for our continent’s development and it offers many opportunities for mutually beneficial trade and investment partnerships between two countries,” he stated.
Zuma cited the $1.2-trillion Tripartite North–South Corridor Investment Programme as an example of the benefits of intra-Africa relations. The programme supports some of Africa’s busiest trade routes, as it links the Port of Dar Es Salaam, in Tanzania, to the Zambian Copperbelt, and extends into Lubumbashi, in the Democratic Republic of Congo (DRC). The route continues through Zimbabwe and Botswana to the Durban port, in South Africa.
“In effect, the North–South corridor initiative will service eight countries – Tanzania, the DRC, Zambia, Malawi, Botswana, Zimbabwe, Mozambique and South Africa. I am honoured to champion the North–South corridor initiative on behalf of the African Union . . . it will unlock many opportunities on the continent,” he elaborated.
Zuma also called on the private sector to work with governments in Africa to ensure intracontinental trade and collaboration.