On October 1st, the re-opening of the Zimbabwe border will enable cross-border trade between the majority of Zimbabwe’s SME’s, enabling access to goods from South Africa.
Faced with the drastic impact of Covid–19, Zimbabwe is finally re-emerging from a state of complete lockdown.
Only recently, Zimbabwean authorities have started reopening the economy in stages, as the country grapples to create economic momentum. A day after the Zimbabwe recorded a rise in COVID-19 recoveries on the 15th of September 2020, the Information Minister Monica Mutsvangwa announced a raft of relaxation protocols. Business operating hours where extended to 18:30 pm up from 16:30 pm, the national imposed curfew was reduced from 6pm -6am to 8pm – 6am.
The government went further and approved the resumption of inter-city travel in a move to open up the economy following nearly six months of restrictions due to the Covid-19 induced national lockdown. Information Minister Monica Mutsvangwa stated that this was meant to facilitate the smooth movement of examination candidates and tourists.
The most significant indicator as to the Governments intentions to reopen the economy is by reopening the border with Zimbabwe’s largest trade partner South Africa. Trade between these 2 countries is worth just over $2 billion dollars annually and while cargo was allowed passage, the level of goods finding passage through the Beitbridge Border Post had reduced significantly. This is predominantly due to the fact the Zimbabwean economy is currently dominated by SME’s (small to medium enterprises).
Many of these SME’s depend on traveling to South Africa to source goods. As a way to circumvent the border closure, the majority of these SME’s were forced to pay middlemen to help import goods resulting in higher prices, as the offset were the transaction costs taken via the middlemen service. Charges of up to 30% of the invoice value of goods being shipped had to be accounted for. However with the border opening on the 1st of October, many traders who are considered the lifeline of the Zimbabwean economy will resume their cross-border travel.
The International Cross Border Traders Association president Mr. Dennis Juru claims the reopening of the border for human traffic will enhance cross border trade with the greater SADAC region, Mr. Jurus’ association had earlier written a letter to President Ramaphosa (the South African President) requesting for the borders to be opened to the public, as closure had rendered over 1000 cross border traders without a source any livelihood.
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The significantly high numbers of cross border traders has a direct impact on the country’s economy. The aim for the government is to implement strict control measures while seeing the upward trajectory as Zimbabwe is highly dependent on foreign currency, given the hyperinflation associated to local money.
These steps towards reopening the country are likely to be a welcome to many tourists. South Africa is a conduit for a large number of visitors coming to Zimbabwe. With a lax approach to tourism, many Zimbabwean tour operators haven’t undertaken online operations for payments, thus many South Africans and even foreigners traveling through South Africa find it easier and cheaper to visit Zimbabwe’s rich destinations such as Victoria Falls and Hwange National Park. This development couldn’t have come soon enough as the country’s tourist industry has been hemorrhaging.
According to the Zimbabwean government, the tourism sector forecast indicated the industry would shed about 7.5% in 2020 as a direct result of the effects of COVID-19. The World Travel and Tourism Council stated that tourism contributed to nearly 3.5 of the national GDP, and ancillary services via the tourism supply chain stood at over 8% in 2017 and 2018.
These policies of relaxation measures will come as an early Christmas gift to investors and industry leaders, as it aims spur commercial activities in what is considered to be a very stagnant Southern African economy. The pro-relaxation strategy will enable Zimbabwe to be seen by foreign agents as an attractive investment destination, as long as the government can provide unique incentives post COVID-19.
One sector already paying dividends is Agriculture. Zimbabwe is projected to harvest nine months’ supply of wheat from its 2020 winter crop in the process saving close to US$60 million in imports it would normally have. Essentially by increasing output, the country will have enough supply entering the 2021 season. The Ministry of Lands, Agriculture Water and Rural Resettlement has shown keen interest in entering into memoranda of understanding with private value chain players to ensure value chain financing and participation of the private sector in every stage of wheat production as stated in Zimbabwe’s Agriculture Recovery Plan. This envisages that at least 40 percent of such as grain processors, millers and stock feed manufacturers should secure their agricultural raw materials locally through value chain financing.
Dr Masuka , the recently appointed Zimbabwean Minister of Agriculture said “The benefits of this approach are indeed multifarious, including foreign currency savings through import substitution, employment generation, local farmer capacitation and risk reduction,” He also highlighted how farmers can now access inputs for the forthcoming summer cropping season under both the Climate-Proofed Presidential Inputs Scheme popularly known as Pfumvudza .
Zimbabwe is truly in need of these reopening measures as it has been hit hard. It is with great hope that this reboot will bring with it the boost that the economy has desperately needed.