Cablegate: South Africa/Zimbabwe Trade Holding Steady

VZCZCXRO1328
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #3184 2501555
ZNR UUUUU ZZH
R 071555Z SEP 07
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 1675
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHSB/AMEMBASSY HARARE 3552

UNCLAS PRETORIA 003184

SIPDIS

SENSITIVE BUT UNCLASSIFIED
SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD ZI SF
SUBJECT: SOUTH AFRICA/ZIMBABWE TRADE HOLDING STEADY

1. (U) Summary. Despite the economic turmoil in Zimbabwe,
trade between South Africa and Zimbabwe remains steady making
the SA/Zimbabwe trade partnership the largest in the Southern
African Development Community (SADC). Other African
countries are beginning to close the gap as SA reaches out to
new export markets, but Zimbabwe still has a wide margin as
the number one importer of SA goods. Exports in petroleum,
machinery, and vehicles, and imports of platinum and nickel
have kept trade relations strong. End Summary.

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STRONG TRADE RELATIONS
----------------------

2. (U) Despite its economic turmoil, Zimbabwe continues to
maintain its position as SA's number one trading partner in
the SADC region, with 7.4 billion rand (1.05 billion USD) in
SA exports and 4.6 billion rand (657 million USD) in imports
from Zimbabwe during 2006. Trade between the countries has
remained steady with SA exports dropping by only 1 percent
since 2005 and imports from Zimbabwe booming with a 32
percent increase. Trade is favorable to SA, which had a
trade account surplus of 2.78 billion rand with Zimbabwe in
2006. Zimbabwe has kept the lead as SA's largest regional
trade partner, but Zambia and Mozambique are closing the gap.
Zambia inched ahead as SA's top regional export market in
2006, with Mozambique not too far behind. Meanwhile,
Zimbabwe remained by a wide margin SA's number one regional
source of imports in the same year. The following chart
indicates the steadiness of trade between the two countries
(figures in million rand).

SA/Zimbabwe Trade

Through
Jun 2007 2006 2005 2004
SA Exports 3,959 7,411 7,486 6,182
SA Imports 3,349 4,633 3,132 2,796
Trade Balance 610 2,778 4,354 3,386

3. (U) South Africa's historical trade relations with
Zimbabwe and SA's fuel refinery capacity have helped to
maintain its export market with Zimbabwe. At the same time,
SA's platinum processing plant and high commodity prices has
underpinned the growth in imports from Zimbabwe. SA's top
three exports to Zimbabwe include petroleum, machinery and
vehicles. Imports are centered on platinum and nickel.

Through
SA Exports Jun 2007 2006 2005 2004
Petroleum 668 1,389 1,087 1,448
Machinery 678 1,191 1,049 962
Vehicles 633 670 443 417

Through
SA Imports Jun 2007 2006 2005 2004
Base Metals 1,915 2,188 602 317
Minerals 866 1,238 1,517 1,262

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SHIFT IN TRADED GOODS
---------------------

4. (SBU) Despite these steady figures, the nature of trade
has shifted as Zimbabwe's economy has declined. Zimbabwe's
agricultural exports, except for tobacco, have imploded.
According to SAIIA economic analyst Diana Games, Zimbabwe
exported 300,000 tons of agricultural goods (80 percent
maize) to SA in 1997, but only tobacco in 2005, which was
down from 250 million kilos in 1997 to 60 to 70 kilos in
2005. SA's import numbers have continued to grow, however,
as SA imports shifted from agricultural products to ores,
including platinum and nickel. High commodity prices helped
to further increase these import figures.

5. (U) Exports from SA to Zimbabwe have also changed as
Zimbabwe's need for manufactured products grew with slow
downs in local production. Vehicle and machinery sales have
expanded 38 percent and 19 percent, respectively, since 2004.
The export of these products continues to climb; the level
of vehicle exports as of June 2007 was almost equal to the
traded amount for the entire year of 2006.

6. (U) Media reports indicate that informal trade, which is
not captured in the above statistics, is also growing rapidly
as shortages in Zimbabwe become more severe. Zimbabwean
buyers have streamed into SA border towns to purchase
products such as bulk groceries, furniture and "luxury
goods," such as olive oil, olives and tuna, needed by
Zimbabwean hotels and lodges.
Teitelbaum

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