SA unrest bites Zim industry

LIVINGSTONE MARUFU

A crippling shortage of critical raw materials, coupled with rocketing prices in South Africa following a deadly unrest in Africa’s second largest economy, has placed Zimbabwe companies under severe pressure.

The unrest, which ravaged South Africa in recent weeks, has created a huge gap in the manufacturing industry causing prices to rise due to an increase in demand.

Industrialist Sifelani Jabangwe told Business Times that the effects of the unrest in South Africa are beginning to show.

“The prices of goods are likely to go up soon as the prices of raw materials have gone up thereby putting pressure on local companies to increase prices so as to remain in business,” Jabangwe said.

“The situation has left various local companies in a conundrum as they would want to balance between viable prices which cater for the softening disposable incomes and a need to survive.”

Jabangwe said despite the improving situation, various companies continue to face delays in bringing in raw materials.

He said some companies which bought raw materials four weeks ago have not yet received their goods.

The challenges in procuring raw materials are expected to continue as the South African industry will struggle to satisfy its market after multimillion dollar losses.

Jabangwe said limited working capital for the industry has escalated the challenges as various companies lack significant stocks.

The widespread looting and social unrest that came after the imprisonment of former President Jacob Zuma is damaging business confidence, and has disrupted the country’s key trade routes.

Some industrialists say South African companies will take eight to 10 weeks to recover and as of now they are restocking their shops, leaving limited room for exporting.

It is estimated that South Africa will take two to three years to recover and this means Zimbabwe will get raw materials after the host nation has satisfied her own industry.

“New stock is now expensive due to increased raw materials prices in South Africa. We expect massive shortages in September going forward,” an industrialist who preferred anonymity told Business Times.

Any challenge that impacts South Africa will have some ripple effects in Zimbabwe as the country solely depends on its neighbour.

The bulk of Zimbabwe’s goods come from the Durban port. Various containers were looted and burnt at the port.

Zimbabwe spends close to US$2bn on South African imports yearly and exports at least US$2.3bn worth of goods. According to South African authorities, over 200 shopping malls were looted and retailers lost an estimated R2bn.

A recent report by the Confederation of Zimbabwe Industries (CZI) showed that the local industry requires about US$2bn for retooling. However, the local companies are failing to access adequate foreign currency from the auction system, pushing them to source forex from the parallel market, where premiums are punitive.

The challenges facing industry, CZI said, have resulted in the de-industrialisation of the manufacturing sector in the past five years.