Zimbabwe has cultivated a vital partnership with the UAE as a response to western sanctions and economic isolation. This collaboration has seen the UAE invest $1.4 billion in Zimbabwe’s gold and real estate sectors, making it the nation’s largest export partner. Despite these advancements, Zimbabwe faces significant economic hurdles, including substantial debt and inflation, necessitating broader reforms alongside foreign investment.
Zimbabwean President Emmerson Mnangagwa has spent six years cultivating ties with the UAE, which have become vital for Zimbabwe’s economy, long neglected by the West. Over this period, the UAE surpassed China to become Zimbabwe’s top export partner, investing $1.4 billion in sectors such as gold and real estate. According to political science professor Eldred Masunungure, this relationship has transformed the UAE into an essential trading partner for Zimbabwe.
In Mount Hampden, Shaji Ul Mulk is spearheading projects like a cyber city to revitalize the country’s capital. The Dubai Gold & Commodities Exchange has agreed to set up a local gold market, alongside plans from Bluefin Gold Group to establish operations in Zimbabwe. The UAE consistently ranks among the top foreign direct investors in Zimbabwe, demonstrating its commitment to strengthening bilateral relations.
Despite the opportunities, Zimbabwe’s economic challenges persist. The country’s debt has escalated to $21 billion since it defaulted in 1999, and its currency struggles, having undergone six resets in 16 years. High inflation remains a significant obstacle, impeding the growth of large businesses. A cautious approach is essential for both investors and Zimbabwe as it navigates these issues.
Gulf states like the UAE are leveraging their petrodollars to enhance their influence in Africa, especially as China reduces lending and Western countries focus inward. The UAE government reports a total investment of $110 billion across Africa in sectors like trade and infrastructure. Investments target countries that align with UAE strategic interests, although they also necessitate a careful assessment of risks.
The UAE’s interest in Zimbabwe gained traction following Mnangagwa’s 2019 investment promotion tour aimed at reviving an economy crippled by sanctions and mismanagement. The country’s gold sector has drawn significant UAE interest, showcasing Zimbabwe as a potential player in global markets as output recently hit a record 36 tons. Senior officials underscore the importance of UAE ties for Zimbabwe’s economic survival.
However, analysts like Hasnain Malik warn that current investments alone cannot stabilize Zimbabwe’s economy. A multifaceted strategy addressing debt arrears, fiscal discipline, and a floatable currency is paramount. The collaboration with the UAE presents a stepping stone, but only as part of broader economic reforms that include attracting more multilateral finance and investments.
The relationship between Zimbabwe and the UAE has developed as a crucial economic lifeline for Zimbabwe, particularly since the West has imposed sanctions and economic restrictions for decades. Under President Mnangagwa, Zimbabwe has attempted to revitalize its economy and attract foreign investment, particularly after years of economic mismanagement under former President Robert Mugabe. The recent pivot toward the UAE signifies a strategic shift in international partnerships as Zimbabwe negotiates its economic struggles, especially given its significant debt and informal economy.
The emergence of the UAE as Zimbabwe’s foremost trading partner highlights a significant shift in geopolitics and economic strategy for Zimbabwe. With substantial investments in various sectors, the UAE helps mitigate some economic difficulties faced by Zimbabwe. However, systemic economic reforms and a focus on stabilizing the currency are crucial for Zimbabwe to achieve enduring economic recovery and growth. The relationship with the UAE, while beneficial, needs to align with a broader agenda to address Zimbabwe’s fundamental economic challenges.
Original Source: financialpost.com
