Harare – President Robert Mugabe, accompanied by cabinet ministers, has arrived in South Africa amid high hopes back home – where the economy is reclining, companies closing shop and foreign investment wilting – that his delegation will lay the foundation for business and investment engagements between the two countries.
Mugabe and President Jacob Zuma are set to address a meeting of South African and Zimbabwean corporate leaders on Thursday. The gathering of the business leaders will discuss possible investment and cooperation in sectors such as agriculture and agro-processing, retail, mining, energy and infrastructure among others.
Analysts say Zimbabwe is hoping to strike a deal for an economic rescue package with its southern neighbour. The presence of business leaders and cabinet ministers is also being viewed as an indication of Harare’s intentions to seek investments and financial aid, economists and analysts said, amid a gloomy outlook for the Zimbabwean economy.
“The fall in the rand’s buying power has been significant enough to cause serious downturns in private sector spending. Tobacco and cotton exports are performing badly, even more banks could fail and the prices of the two major exports, gold and platinum, are weak,” economist John Robertson said on Tuesday.
In light of the projected poor performance of Zimbabwe’s economy, Mugabe has looked up to his country’s southern neighbour at a time when Russia, shunned by western governments, has also looked up to Africa, including Zimbabwe, for investment potential.
Economists say it makes sense for Zimbabwe to seek economic assistance from South Africa which is already battling illegal Zimbabwean settlers seeking greener pastures and running away from bleak economic prospects back home.
“It will boil down to the preparedness of the South African government to advance any financial package. But for the investment case by private companies, Mugabe has to send a clear message that his country respects property rights and is open for foreign capital,” said economist Johannes Kwangwari.
The two countries already enjoy strong economic ties, with the Department of Trade and Industry saying on Tuesday afternoon that “Zimbabwe is one of the key trading partners of the Republic of South Africa in the Southern Africa Development Community region”.
The SA ministry of International Relations said: "The objective of the visit is to consult on issues of mutual interest‚ paying particular focus on bilateral and economic co-operation‚ including regional and continental matters."
It added that Zimbabwe was an “important investment destination for South Africa” and that it offered “vast opportunities”. However, there are growing concerns that the operating environment in Zimbabwe is no-longer conducive for foreign investments, with current investors, including Impala Platinum [JSE:IMP], already hesitant to fund expansion projects in the country.
SA’s International Relations and Cooperation Minister, Mashavave, told journalists at the Pretoria Air Force Base after Mugabe’s arrival that Mugabe and Zuma did not have political issues to discuss regarding the political situation in the southern African country.
“There is no political issue that we must resolve. They (Zimbabwe) have conducted peaceful elections and that’s why we are moving forward,” said Mashavave.
Among the cabinet ministers accompanying Mugabe were Finance Minister Patrick Chinamasa, Environment Minister Saviour Kasukuwere and Health Minister David Parirenyatwa. Another advance entourage that included Transport Minister Obert Mpofu and Industry Minister Mike Bimha, was already in SA.
Officials in Zimbabwe told Fin24 ahead of Mugabe’s departure for Pretoria on Tuesday that Mugabe’s government had resolved that the economy requires external financial rescue and foreign investment to lift it out of current problems.
Zimbabwe has continued to witness declining productivity and the closure of companies is worsening while job losses are sinking the country into an informal economy.
“An informal economy means that there are no taxes for the government and state revenues dry up. It is against this backdrop that Mugabe will try to persuade the SA government and the business community to rescue his country through financial assistance and investment deals,” said an official.