SA economic aid

South Africa has announced an economic "rescue package" for Zimbabwe worth an estimated US $133 million, officials
told IRIN on Monday.

The package was agreed following a six-hour meeting on Friday in the Zimbabwe capital, Harare, between South African President Thabo Mbeki and President Robert Mugabe. Although it was not immediately stated how the funds would allocated, economists said some of the money would go towards helping Zimbabwe meet its debt obligations to oil suppliers.

The suppliers, which include South African companies, are owed about US $237 million by the cash-strapped oil procurement agency, the National Oil Company of Zimbabwe (NocZim).

Zimbabwe's economy, which is experiencing foreign currency shortages, is facing its fuel shortages since December when suppliers limited provisions to Zimbabwe following NocZim's failure to pay its debts.

Mbeki's delegation included the trade and industry and the public
enterprises ministers. They met with an equally powerful contingent led by Mugabe in what analysts described as an "economic rescue mission".

Economist Lumkile Mondi, told IRIN that South Africa could not afford to allow Zimbabwe's economy to collapse as this would adversely affect the whole southern African region, of which the two countries are powerful leaders. South Africa, said Mondi, could face a huge migration by Zimbabweans should its economy collapse.

In 1998 alone, South Africa exported goods valued at US $1 billion to Zimbabwe, which makes Zimbabwe a major importer of South African products in Africa. At the same time, Zimbabwe's power utility company, ZESA is said to owe South Africa's electricity supply commission, ESKOM, about US $3.3
million.

Eddy Maloka of the Africa Institute of South Africa told IRIN that South Africa realises that an economically-sound Zimbabwe is in the interests of the southern African region. "The collapse of Zimbabwe's economy would negatively affect the whole Southern African Development Community (SADC) region." He added that South Africa is correctly asserting its role as an
honest broker in the region by influencing policies within member countries.

Meanwhile, the South African daily, 'Business Day' reported on Monday that the two countries had identified about 20 joint investment projects in Zimbabwe to stimulate regional trade and help stave off economic collapse. The report added that the projects are in infrastructure, tourism and natural gas exploitation in Zimbabwe and would involve South Africa's
state-owned corporations such as the Development Bank of Southern Africa and the Industrial Development Corporation.