Since 2022, the UAE has emerged as Zimbabwe’s largest trade partner, having invested $1.4 billion in real estate and gold trading, among other ventures.
This amount denotes that the UAE has ousted China as the most important partner to the resource-rich Southern African country.
The UAE’s massive investment into Zimbabwe’s economy is its form of entry into the race to grow its influence on the African continent, which has been a heated scurry between China and the West.
According to the UAE administration, the Middle-Eastern country has spent $110 billion in Africa in trade, investment, renewable energy, logistics, food security, and infrastructure projects.
“The UAE has gone within a few years from being unknown in commerce to becoming the nation’s foremost trading partner,” Eldred Masunungure, a political science professor at the University of Zimbabwe, said.
Despite Zimbabwe’s debt burden, which has risen to $21 billion since its default in 1999, the UAE has regularly been among the southern African country’s top five foreign direct investment sources, according to Zimbabwe Investment, as seen on Bloomberg.
The economy is mostly informal, and high inflation, the economy’s Achilles heel, endures, making it difficult for bigger firms to thrive.
Following Zimbabwe’s current president, Emmerson Mnangagwa’s 2019 visit to the UAE, the country decided to invest in Zimbabwe.
Zimbabwe’s gold, which has become a “bright spot” for the economy, was the primary draw for the UAE, according to Oxford Economics economist Lyle Begbie. The production reached a record 36 tons last year.
In 2019, as per some top officials in Mnangagwa’s government, Zimbabwe’s ties to the UAE gave the country “options for survival” and continue to do so, according to Hasnain Malik, an emerging market strategist at Tellimer in Dubai.
“UAE investment inflows are nowhere near large enough, on their own, to build up the foreign reserves needed to support a stable currency,” he said.
“The economic solution for Zimbabwe requires addressing sovereign debt arrears, committing to a credible fiscal path, unlocking multilateral finance and foreign direct investment, and, ultimately, allowing a freer float of the currency,” he added.
