Since the onset of the Zimbabwean crisis South African businesses have been maximising business in the former bread basket of Southern Africa nation.

A report by The Solidarity Peace Trust, a non-governmental organisation registered in South Africa states that the collapse of Zimbabwe’s economy in recent years has been catastrophic. Records state that Zimbabwe’s gross domestic product (GDP) plummeted 40% from 1999 to 2003 and it has continued to decline. The drastic shrinkage of the economy has been attributed to the collapse of the key contributors to the country’s GDP namely agriculture, manufacturing and tourism following the introduction of the government’s contentious fast track land redistribution programme in 2000. Manufacturing, mining and export sectors have declined steeply and unemployment hovers near 80%. Production capacity has declined precipitously and production costs have increased hugely. The deterioration of agriculture, the mainstay of Zimbabwe’s economy which at its prime constituted 50% of exports, has had a disastrous impact on the economy.

Between 1998 and 2001, foreign direct investment in Zimbabwe dropped by 99%. The risk premium on investment jumped from 3, 4% in 2000 to 153, 2% by 2004. The country’s financial institutions are in disarray and its once productive farms sit idle. With national unemployment hovering around 80%, the clean-up campaign (Operation Murambatsvina) aggravated the already unbearable levels of poverty, social suffering and hopelessness pervading Zimbabwe. Owing to unreasonable price controls and ballooning overheads, many retail outlets have not been able to stock foodstuffs and basic commodities. The high demand for essential goods has led to high prices for basics, denting the incomes of workers already reeling from increases in transport and medical costs.

However despite Zimbabwe’s political and economic problems, trade and investment ties between South Africa and Zimbabwe remain very strong. Perhaps because of its troubles, Zimbabwe remains South Africa's most important trading partner in Africa. South African companies are unlikely to pull out of Zimbabwe because of the country’s internal crisis. Many South African firms believe Zimbabwe is still a better and easier place in which to do business than many other African countries and they have found ways to negotiate Zimbabwe’s largely dysfunctional economy in order to maintain a presence there in expectation of eventual political change and economic recovery.

While the South African government’s response to the Zimbabwean crisis has been driven by broad political concerns, it is also clear that sections of the corporate sector from South Africa engaged in Zimbabwe have exploited the opportunities thrown up by the crisis in that country.

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