Zimbabwe has turned to the UAE for economic support after years of Western isolation. The UAE has invested significantly in Zimbabwe, overshadowing Chinese investments, and aims to strengthen ties further. However, Zimbabwe faces dire economic challenges, with massive debt, high inflation, and currency instability, necessitating comprehensive reforms for recovery.
Zimbabwean President Emmerson Mnangagwa has spent six years cultivating ties with the United Arab Emirates (UAE), revitalizing an economy long neglected by the West. The UAE has become Zimbabwe’s most significant export partner, surpassing China, and has invested $1.4 billion in various sectors since 2022. This influx is part of a broader UAE initiative to strengthen its influence throughout Africa, contributing to the nation’s economic recovery.
A prominent example of this relationship is the development of a “cyber city” in Mount Hampden by Dubai businessman Shaji Ul Mulk, aimed at transforming the capital city. The Dubai Gold & Commodities Exchange is also collaborating to establish a gold market in Zimbabwe, reflecting the Gulf state’s commitment to supporting the country’s economic landscape. The UAE ranks among the top foreign direct investment sources for Zimbabwe, and plans to enhance these ties further.
Despite these promising developments, Zimbabwe faces significant economic challenges, including a staggering $21 billion debt and persistent high inflation that hampers business growth. Efforts to establish a stable local currency have floundered, complicating investment prospects. The UAE’s engagement with Zimbabwe is part of a larger trend, as Gulf states utilize their wealth to wield influence on the continent while other powers reduce their investments.
According to UAE government data, the Emirate has directed $110 billion into Africa, focusing on strategic sectors like renewable energy and infrastructure. Such investments aim for substantial returns, as outlined by Jim Krane, who notes that profitability drives these partnerships, though diplomatic goals also play a role. The UAE’s past investments in Egypt highlight its ability to shift funds to meet urgent economic needs in partner countries.
Mnangagwa’s 2019 visit to the UAE was pivotal in fostering this bond, sparking interest primarily in Zimbabwe’s golden resources. Rising gold production offers a beacon of hope amid economic instability, with outputs peaking at 36 tons last year. Although current investment levels are insufficient to resolve Zimbabwe’s economic crisis fully, they provide critical options for recovery, as noted by various economists.
For over twenty-five years, Zimbabwe has been isolated from Western markets due to sanctions and economic mismanagement, culminating in a significant inability to manage its international debts, notably to China. The government has attempted various strategies to attract foreign investment but has struggled amidst persistent inflation and currency instability. As other global powers recede, the UAE’s increased involvement reflects a shift in investment dynamics on the African continent, seeking strategic positions through financial engagement. Simultaneously, the UAE is engaging with African nations through substantial investments across multiple sectors, focusing on long-term interests that also align with their geopolitical strategies. This engagement serves both to enhance UAE’s economic portfolio and to provide necessary financial lifelines to struggling economies like Zimbabwe’s.
In conclusion, Zimbabwe’s strengthening relationship with the UAE marks a hopeful shift in its economic strategy following years of Western sanctions and financial isolation. The UAE’s investments signify not only a partnership for economic recovery but also an opportunity for Zimbabwe to stabilize its financial system amidst ongoing challenges. Effective management of these investments and addressing fundamental economic issues is essential for Zimbabwe to realize its potential and rebuild confidence in its economy.
Original Source: financialpost.com
