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The Regional Impact of the Zimbabwe Crisis
The main impact of the collapse of the Zimbabwe economy has of course
been
on its own people. However, sight should not be lost of the wider
impact and
here I personally feel that studies conducted some three years ago were
somewhat limited in their scope and, in my personal view,
underestimated the
impact.
To give any impact study real meaning, we should start by estimating
where
the Zimbabwe economy might have been if this implosion had not taken
place.
That would then suggest levels of regional trade and the multiplier
effects
that could be used to assess the possible impact of such growth and
stability on the other countries of the region.
Zimbabwe sits astride regional power and transport systems and at one
time
had the most advanced and developed financial and industrial sectors
after
South Africa, in the region. At one stage it was the largest trade
partner
of South Africa, Zambia, and Malawi on the continent and was also a
major
trading and services partner for Botswana and the Congo with a lesser
position in Namibia, Mozambique and Angola. After South Africa we also
had
the largest tourism industry in the region.
Another factor that I think is understated is the impact of contagion
and
perception. There is no doubt that we are all tarred with the same
brush
when it comes to fighting for a place in the sun as far as trade,
investment
and tourism is concerned. These are all elements in the development
business
that are very sensitive to perceptions and public understanding. They
are
also very shy when it comes to any sort of conflict or instability.
Capital
flight from areas or countries suffering from instability and conflict
are a
sensitive and critical barometer of their situation and its
implications.
I took as a base line 1996/97 as the last year when the Zimbabwe
economy was
still functioning on a 'normal' basis and expostulated the social,
economic
and trade situation to 2006 over a period of 10 years. The results were
very
interesting: -
Factor 1996/97 2005/06 (Estimated) 2005/06 (Actual)
GDP (US$ billions) 8,4 12.9 4.4
Tourism (visitors) 1 200 000 2 500 000 280 000
Exports (US$ billions) 3,4 5.78 1,4
Foreign Aid (US$ million) 800 1200 350
Imports (US$ billion) 4.2 7.4 1.8
Agric Output (US$ b) 1.554 2.564 500
Mining Output (US$ m) 672 1176 780
Employment 1 400 000 2 030 000 850
Population 12 500 000 14 790 000 10 500 000
When you look as these figures, the effect of the implosion over the
past 10
years can clearly be seen. The assumed rates of growth in these numbers
is
modest - 4 per cent per annum in GDP, more in exports driven by rising
export receipts in mining and agriculture as well as tourism. It should
be
noted that the tourism industry in South Africa has doubled in size
since
1995 and I think tourism here would have increased faster than that
under
normal conditions. There were no major droughts in this decade.
The regional impact is obvious - in 1996 we were the largest trading
partner
for South Africa in Africa - trade in both directions at about R1
billion a
month with imports from South Africa growing rapidly. By my estimates
South
Africa could have been exporting goods to Zimbabwe to the value of at
least
US$2,5 billion a year by 2006 perhaps even higher. All these exports
would
have been in the form of manufactured products with high multiplier and
employment effects in the South African economy. This element alone
points
to a loss of potential exports to Zimbabwe by South Africa of something
approaching US$10 billion in ten years.
If the region had not suffered from the effects of the Zimbabwe crisis
internationally there can be little doubt that tourism would have risen
faster than it has - by how much is difficult to estimate. Some of this
potential has found its way to Botswana and Zambia but most of it has
been
lost - perhaps to the extent of 3 million potential visitors to the
region
in 2006. In the form of jobs this is equal to 375 000 jobs in the
tourism
sector alone.
In terms of capital flight, it is estimated that Zimbabwe has been
loosing
up to US$500 million a year in capital stock to capital flight. In
South
Africa the net loss of capital is in the order of a billion Rand a
month -
about three times the level of capital flight from Zimbabwe. The
difference
is that Zimbabwe is in a deep political and economic crisis with
damaging
and negative economic policies. South Africa on the other hand has
pursued
conservative economic policies and has made a remarkable transition
from
what it was before. Other SADC States all have positive net capital
inflows - but resource based rather than based on either the investment
climate or confidence in those countries as a developing services or
industrial economy.
Without the negative impact of the Zimbabwe crisis it is possible that
South
Africa might have experienced perhaps 2 per cent more real growth in
GDP per
annum than it has actually achieved since 1994. This is equal to US$2,6
billion a year in additional GDP growth. Combined with capital flight
of
about half this figure this represents a loss of potential economic
activity
of US$4,3 billion a year. No developing country, especially a country
like
South Africa, with 40 per cent unemployment, millions homeless and
extreme
rural and urban poverty, can ignore such a loss of economic potential
without running the grave risk of instability in the longer term. That
is
exactly the price that South Africans are paying for Mugabe's
delinquency
and bad government.
If you lift Zimbabwe out of the SADC economy and study what is left,
the
picture is pretty good. Angola, Mozambique and Botswana are all headed
for
growth above 8 per cent; Zambia is not far behind while South Africa's
economy, boosted by the massive surge in mineral and precious metal
prices
is also likely to grow strongly. That leaves the minnows of Malawi,
Swaziland and Lesotho - all showing growth but at lower levels. If you
then
had Zimbabwe also recovering and perhaps growing strongly, its economy
fuelled by tourism, mining and agriculture, you would see stronger
regional
growth overall - perhaps of the order of 1 to 2 per cent. That's the
difference between making an impact on poverty and unemployment and
not.
Eddie Cross
Bulawayo, 16th July 2006
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