Zimbabwe’s #UAE Gamble Hands Economy a Lifeline After Being Shunned by West - Bloomberg

Zimbabwe’s UAE Gamble Hands Economy a Lifeline After Being Shunned by West - Bloomberg

Zimbabwean President Emmerson Mnangagwa’s six years of wooing the United Arab Emirates has given a lifeline to a nation that the West has ostracized for a quarter century and is unable to repay its loans to China.

The wealthy Gulf state has overtaken China to become the resource-rich nation’s biggest export partner and since 2022 has plowed $1.4 billion into everything from gold trading to real estate. The steps are part of a wider effort by the UAE to build influence across Africa that’s seen it become the country that routinely pledges the most foreign direct investment into the continent.

“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.

In Mount Hampden, 11 miles northeast of Harare, Shaji Ul Mulk, a Dubai-based businessman who owns Mulk International, is developing a flagship “cyber city” for the rich to replace the capital, which is in ruin. The Dubai Gold & Commodities Exchange has a pact to establish a gold market, miner Bluefin Gold Group plans to set up in the country and Abu Dhabi-registered Terra Mining will start producing gold from a Zimbabwean mine this month, according to its chairman.

The oil-rich Gulf state is also consistently among the southern African nation’s top five foreign direct investment sources, according to the Zimbabwe Investment and Development Agency. And it doesn’t plan to let up.

The UAE wants to maintain and expand its relationships with Zimbabwe in line with its broader foreign policy objectives, a UAE official who asked not to be identified said. Something Zimbabwe plans to encourage.

“Going forward, we’d want the UAE to invest in the gold sub-sector, as an increase in production means an increase in royalties which we use to back our currency,” Persistence Gwanyanya, a Reserve Bank of Zimbabwe monetary policy committee member, said.

Still, caution may be warranted because of the state of Zimbabwe’s economy. The southern African nation’s debt pile has ballooned to $21 billion since a default in 1999. Its sixth attempt at a viable local currency in 16 years is foundering less than nine months after debut. The economy is largely informal, high inflation, the economy’s Achilles’ heel, persists, making it difficult for big businesses to flourish.
Petrodollars

Gulf states are increasingly using their petrodollars to build influence in Africa, as China pares back loans to the continent, Europe scales back its presence and the US becomes more domestically focused.

The UAE has invested $110 billion in Africa spread across trade, investment, renewable energy, logistics, food security and infrastructure, according to its government.

Its strategic investments are made with the prospect of earning outsized returns, said Jim Krane, a fellow at Rice University’s Baker Institute for Public Policy in Houston. The investing firms, which are mostly state-linked, target countries where they can advance the strategic interests of the UAE and “are willing to overlook some of the risks that have otherwise prevented firms from entering these frontier markets,” he added.

“There are diplomatic motivations that go beyond profitability, but profits are still expected,” said Krane.

Last year, the Abu Dhabi wealth fund ADQ agreed to invest $35 billion in Egypt, most of it to develop prime land on the North African nation’s Mediterranean coast. That rescued the economy from its worst foreign-exchange crisis in decades.

The UAE’s decision to invest in Zimbabwe came after Mnangagwa visited the country in 2019 as part of a roadshow to attract investment into an economy that was in freefall and locked out of capital markets because of sanctions, the debt default and decades of misrule by Robert Mugabe.

The UAE was mainly attracted to Zimbabwe’s gold, which has become a “bright spot” for the economy, Lyle Begbie, an economist at Oxford Economics said. Last year output rose to a record 36 tons.

Ties to the UAE provided Zimbabwe with “options for survival,” senior officials in Mnangagwa’s administration said in 2019 — and still do, said 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.”

Most Gulf markets subdued as Trump's Gaza remarks spark concerns | Reuters

Most Gulf markets subdued as Trump's Gaza remarks spark concerns | Reuters

Most Gulf stock markets ended subdued on Wednesday in the wake of U.S. President Donald Trump's shock statement about taking control of the war-ravaged Gaza Strip and revamping its economy once the Palestinians are relocated elsewhere.

The announcement followed Trump's shock proposal for the permanent resettlement of the more than 2 million Palestinians from Gaza in neighbouring countries, calling the enclave - where the first phase of a fragile Israel-Hamas ceasefire and hostage release deal is in effect - a "demolition site."

Saudi Arabia's benchmark index (.TASI), opens new tab lost 0.2%, hit by a 0.6% fall in Al Rajhi Bank (1120.SE), opens new tab and a 1.1% decrease in ACWA Power Company (2082.SE), opens new tab.

The kingdom said it would not establish ties with Israel without the creation of a Palestinian state, contradicting Trump's claim that Riyadh was not demanding a Palestinian homeland when he said the U.S. wants to take over the Gaza Strip.

Saudi Arabia's foreign ministry said on Wednesday that it rejects any attempts to displace Palestinians from their land, adding that its stance on the issue was non-negotiable.

Dubai's main share index (.DFMGI), opens new tab and the Abu Dhabi index (.FTFADGI), opens new tab finished flat.

Abu Dhabi stocks stagnated as investors held back ahead of key earnings reports from First Abu Dhabi Bank (FAB.AD), opens new tab and RAK Properties (RAKPROP.AD), opens new tab, while sliding oil prices weighed on the market, said George Pavel General Manager at Naga.com.

In Qatar, the index (.QSI), opens new tab also concluded flat.

The Qatari stock market mirrored its regional counterparts, with external factors influencing general sentiment. While Q4 earnings releases continued, their impact was limited due to prevailing external pressures.

According to Pavel, Qatar's stock market echoed regional trends, with external factors driving investor sentiment. Although fourth-quarter earnings reports continued to roll out, their impact was muted by broader external pressures.

Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab added 0.2%, helped by a 1.2% rise in Commercial International Bank (COMI.CA), opens new tab.