Company information

Zimbabwe’s embargo against imports: Not the right place, not the right time

Harare, Zimbabwe

Harare, Zimbabwe

Zimbabwe has recently and unilaterally banned the importation of South African products with the aim of promoting its national industry. The law was passed in a moment when the country is again on the brink of economic collapse. Ruled by President Robert Mugabe, the country reached the bottom and seems to not have found a way out of it.

Historical context

Zimbabwe, once considered the breadbasket of Africa, has been reduced to one of the poorest countries in the continent within a few decades. The country had experienced real GDP growth of 14.6% in 1980, a good start on its first year as an independent country. Robert Mugabe, as one of the leaders of the rebel groups in opposition to the white minority that ruled prior to Zimbabwe’s independence, became the new country’s first and only president, governing until today.

Mugabe’s path to power has been very controversial. Between 1982 and 1985, at least 20,000 people were killed through “ethnic cleansing”. However, the country’s economy was still doing well at that time and the international community chose to ignore what has shown to be just the beginning of a ruthless dictatorship.

The tipping point that pushed Zimbabwe over the edge may have happened in 2000 when Mugabe fast-tracked a land reform programme started in 1980. During the initial years, this reform occurred in relative peace: the white farm owners voluntarily sold their land to landless black subsistence farmers. The objective of this reform was to promote a more equitable land distribution between black and white ethnic groups. The British government had an agreement in place that financed half the cost of the lands purchased. However, this agreement was cancelled by British Prime Minister Tony Blair.

With the end of the British subsidies, Mugabe started a forced land expropriation programme, transferring thriving farmland from competent farmers to Mugabe supporters, simultaneously displacing over one million civilians and allowing the farms to fail. The violence spread to other fronts, but was mainly targeting his political opposition. Human rights violations included imprisonment, enforced disappearance, murder, torture, and rape.

In the wake of his fight to remain in power, Mugabe brought his country to a complete economic and social collapse. The economy shrank to half the size it had been in 1980, with more than 80% of the population left unemployed. Output fell by 50% between 2000 and 2009, led by a decline in the country’s major foreign-exchange cash crop, tobacco, which slid 64% in 2008 from 2000 levels. Commercial production of maize, the national staple, dropped 76% during the same time. Hyperinflation settled in. By 2009, Zimbabwe issued its infamous 100 trillion dollar bill, which became a symbol of the country’s chaotic economic state. Zimbabwe was then the land of the starving billionaires, with a worthless currency.

Once a thriving new country, with huge potential in the agricultural sector, Zimbabwe became a victim of its own ruler. Mugabe’s political regime of repression against opposition smashed any possibility of a lasting change in the government and policies.

Its economy gave steps to recovery after its dollarisation and complete abandonment of the Zimbabwean dollar. In addition to that, the opposition finally won a share of power between 2009 and 2013 and the GDP saw a growth rate of 6% by 2009 and over 10% until 2012.

However, prosperity does not last if nothing really changes. Zimbabwe has a presidential system, with elections that theoretically should be democratic. Despite what the constitution says, Mugabe, through violence and fraud, managed to remain in power until today and, again, his country is on the brink of economic collapse.

Facing the abyss

In a move Mugabe alleged would boost national industry, he banned imports coming from South Africa starting in early June. The largest exporter to Zimbabwe is South Africa, with over US$700m goods going to the country. The ban in the imports came suddenly, without time for either the South African sellers to prepare for the brisk lost in revenues and with no time for industries in Zimbabwe to adapt and start producing the goods that are now banned from importation. Heavy duties are imposed on those trying to import. The ban or restriction of imports includes cosmetics, cereals, coffee creamer, mayonnaise, cheese, canned fruits and vegetables, second-hand tyres, iron and steel products, furniture and woven cotton fabrics.

Citizens were not happy with this new policy and went to the streets to protest against the seemingly endless sequence of mismanagement decisions characterising Mugabe’s government. After the frustration of having their goods impounded, they set fire to some of the facilities of the country’s main port of entry, Beitbridge Border post. Adding to this, as the national coffers got empty, the government stopped paying its employees on time. Civil servants also took to the streets in protest.

Mugabe reacted to this opposition with violence. Police dealt severely with the protestors, conflict reigned in the streets and dozens of people got arrested.

The Southern Africa Development Community (SADC), an inter-governmental organisation with goals to further socio-economic cooperation among 15 southern African countries, requested that Zimbabwe and South Africa report the implications of the ban in imports for the coherence of the SADC Trade Protocol.

Discussions between the South African Minister of Trade and Industry, Rob Davies, and the Zimbabwean government have been taking place in order to find a common denominator: a compromise that takes into consideration the willingness of Zimbabwe to promote its national industry, while at the same time not damaging too much South African businesses whose main source of revenue are the exports to Zimbabwe.

However, when the focus returns to the people of Zimbabwe, who will mostly be affected by the ban in importation, this whole discussion in the higher international sphere seems purposeless.

An overnight restriction on imports, without prior notice, can only boost the emergence of a black market. Trying to make national industries more competitive by restricting imports and forcing the population, which is already poor, to pay extra money to buy local products, is a policy that, at the very least, should be implemented over a reasonable timeframe.

In a country where most of the people survive with one daily meal and families live on less than $1 per day, a policy like this can only result in chaos. Also, closing off imports heralds doom to the majority of small-scale cross-border traders who constitute more than 50% of the informal employment in a country where formal unemployment is over 90%. A better approach for Zimbabwe would have been to ban maize importation, which can be produced internally. However, given the precarious state of agriculture in Zimbabwe, even this would have to be a well thought through and planned policy, with enough time and support to the local farmers to prepare for this responsibility.

Otavio Veras is a research associate of the NTU-SBF Centre for African Studies, a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University and the Singapore Business Federation. Otavio can be reached at [email protected].

, , , , , , , , , , ,


Simple Share Buttons