By Collin Bhiza

While the Zimbabwean economy continues to take a battering, there are worrying developments that are happening in South Africa.

We have been too occupied with our own challenges – and rightly so; sooner or later, however, we risk catching that cold and our exposure is even greater because not only is South Africa our biggest trading partner (we import 40% of our total imports and export about 75% of our total exports to South Africa), a number of South African countries are heavily invested in Zimbabwe and they contribute a significant part of FDI into the country.

Here is a list of some South African countries that have retrenched or announced retrenchments in 2019 YTD:

Standard Bank – 1,200 (closing over 100 branches as well)
Absa – 850
PPC – Undisclosed
Tiso Blackstar Group – Undisclosed
Tongaat Hulett – 5,000
Van Schaik – Undisclosed
Hulamin Extrusions – 200 (which is 50% of its headcount)
Sibanye-Stillwater – 3,500
Amplats – 2,500
Multichoice – 2,000
Continental Tyre – 170
Alexkor – 238
Dunkin Donuts & Baskin Robbins – 120
IBM
Eskom
Distell
Miway
Nedbank
Continental Tyres
Murray & Roberts, amongst others.

South Africa’s unemployment recently increased to about 27.6% which according to reports is a 15 year high. The South African Rand hasn’t been performing extremely well either. Since January 2018, the ZAR has lost approximately 15% of its value.

Bearish forecasters estimate it could end up at R15.5: USD in the next 12 months (historically, the South African Rand reached an all-time high of 16.84 in January of 2016.)

Why is this important, and why should Zimbabwe be concerned? There are probably four main issues, amongst others, to be wary about:

1. A shrinking SA economy will affect our exports as SA demands less.

2. Many South African companies that are retrenching are not doing this in South Africa alone. The restructuring exercises are affecting regional countries where they are invested as well – Multichoice & Tongaat Hulett are examples. These companies are invested in Zimbabwe. Tongaat Hulett HQ recently gave instruction to the Zimbabwe operation to restructure and downsize.

3. There has been much talk about adopting the SA Rand by joining the common monetary area (or the Rand Monetary Union as others call it). To what degree will challenges facing the SA economy affect us? This needs to be thought through thoroughly. I do not think much thought has been given to this. We appear to be more desperate for anything but our own currency – which is understandable but quite shortsighted and could possibly land us in trouble again – most likely sooner than we think.

4. Of the estimated 5 million Zimbabweans living abroad, 3 million are said to be in South Africa. Challenges in South Africa will undoubtedly affect a number of Zimbabweans living in South Africa and those depending on their remittances back home.

What’s the way forward? Zimbabwe is undoubtedly facing a number of challenges that are more serious than those facing South Africa. However, ignoring or downplaying the risk and exposure in our scenario or contingency planning won’t help either.

Collin Bhiza writes in his personal capacity. He is an Economist by training and currently a practicing Human Resources Professional. You can email: [email protected]