Policy BriefThis week Johannesburg will play host to the African Union (AU) Summit that will be presided over by President Robert Mugabe of Zimbabwe as the current Chair of the organisation. President Mugabe also holds the role of Chair of the Southern African Development Community (SADC) until August 2015 when the President of Botswana will take over. The presence of President Mugabe in South Africa and his high profile role at the AU Summit will no doubt put the spotlight back on relations with Zimbabwe. If the lively exchanges at the Extraordinary SADC Summit held in Harare on 29 April 2015 are anything to go by then we might be in for some interesting discussion between African Heads of State.  It was reported that President Mugabe took the opportunity of the SADC meeting to voice his opinion on the xenophobic attacks in South Africa. This was met by a response from President Khama of Botswana and others implying that the economic situation in South Africa’s neighbours was a contributing factor to xenophobia.

The economy of Zimbabwe continues to suffer with a further reduction expected in factory capacity utilisation to merely 30% in 2015. There have been numerous business closures and little by way of new or expanded investment in the country in recent years. The government continues to spend the vast majority of its budget on the salaries of officials, while failing to meet the needs of the education and health sectors. There is a growing need for the upgrading and maintenance of critical economic infrastructure, including in the energy, water and sanitation, and transportation areas. Zimbabwe effectively operates as a ‘dollarised’ market even though there is formal recognition of other currencies. This puts significant pressure on the liquidity of both the public and private sectors as well as complicating the operation of any kind of effective monetary policy.

In a policy briefing for the South African Institute of International Affairs, published in February 2015, I argued that South Africa has overlooked the impact of the deteriorating economic situation in Zimbabwe in favour of security and political considerations. The decision to remove Zimbabwe from the SADC watch list also highlights how South Africa’s economic diplomacy has not progressed much beyond the promotion of trade and investment. A key factor hindering its success is the lack of co-operation and communication between the South African government and the private sector.

South Africa’s relationship with Zimbabwe would benefit from a shared approach that involves all stakeholders .The following recommendations are put forward in the policy briefing:

  • South Africa should continue to play the role of regional and international leader in managing the Zimbabwe situation by pursuing a strategy that goes beyond security and political concerns to consider the economic implications of what might happen in the near future.
  • Zimbabwe is a critical country when it comes
to southern Africa’s integration agenda. SADC needs to engage with the deepening economic crisis at the highest level (beyond just discussing delays in the implementation of its Protocol on Trade).
  • Greater co-operation should be fostered between the government and private sector in South Africa to develop a more effective economic diplomacy response to the situation in Zimbabwe.

There will be much talk at the AU Summit in Johannesburg about the regional economic integration agenda of the continent. If this is to become a reality and have a positive impact for traders then regional leaders cannot afford to ignore the economic crises that face their neighbours. In the case of South Africa that is Zimbabwe right now. It is in both our national and regional interests to pursue a policy of active economic diplomacy that attempts to assist Zimbabwe in improving its prospects for growth and development.

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