Zimbabwe sharpens focus on trade with UAE

Reuters/Philimon Bulawayo

• Food and minerals attract investors
• New financial centre planned
• Hope for end of ‘pariah’ status

The UAE could soon rival South Africa as Zimbabwe’s largest trading partner as the southern African country competes to attract more foreign investment.

Zimbabwe is working to develop a number of sectors with the UAE, including agriculture, mining and energy, to build on the $2 billion bilateral trade registered last year, Lovemore Mazemo, Ambassador of Zimbabwe, told the UAE state-owned Wam news agency.

According to Comtrade, South Africa was responsible for nearly 42 percent of Zimbabwe’s trade last year, with the UAE (32 percent) second, ahead of China (9 percent).

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Mazemo said Zimbabwean investors want to expand their food and agriculture businesses in the UAE.

Emirati investors are keen to invest in gold and precious metals which account for around 80 percent of trade.

New UAE investments in Zimbabwe could also be driven by plans to develop an offshore financial services centre in the resort city of Victoria Falls. 

Dr Ullas Rao, assistant professor of finance at Heriot-Watt University Dubai, said efforts by the government to build Victoria Falls Stock Exchange (VFEX) into a finance and investment destination “augurs extremely well for investors in the GCC and the UAE”.

“VFEX has the potential to offer robust opportunities for the UAE and Zimbabwe to deepen their trade and investment relations,” Rao told AGBI. 

The offshore financial centre is being modelled on Dubai, Mauritius and the Isle of Man and operates in US dollars. This could make it an option for global banks’ African headquarters, according to real estate consultants Knight Frank which said it could “supercharge” Zimbabwe’s economy. 

“The VFEX has already seen a surge in listings, driven by the trade in US dollars, tax exemptions on capital gains, and the ability to repatriate funds from a country where foreign exchange is in short supply,” it added.

Rao said Dubai free zones like DMCC and DIFC have an opportunity to use VFEX to attract Africa-based investors as Zimbabwe seeks to shred its “pariah state” status.

This is a reference to the era of the late president Robert Mugabe, during which sanctions were imposed by the European Union, the US and the UK.

Zimbabwe’s vice president Constantino Chiwenga last month said the country has lost more than $150 billion due to sanctions imposed following reports of election rigging and human rights abuses in the early 2000s.

President Emmerson Mnangagwa overthrew Mugabe in 2017 but his government has remained financially isolated amid a currency collapse, triple-digit inflation and questions surrounding his re-election earlier this year.

Food, minerals and energy top the list

Rungano Innocent Nyaude, chairperson of the Zimbabwean Business Council UAE, said trade ties in minerals and agriculture are growing as the UAE attempts to broaden food sources and ensure food security. 

“Zimbabwean farmers and producers are looking for new export markets to diversify from the traditional European markets as a risk mitigation strategy to global supply chain shocks like those seen during the Covid pandemic,” he said.

“Trade between the UAE and Zimbabwe will become easier as the UAE has invested and continues to invest in the supply chain infrastructure such as ports and logistics in Africa.’

One example is Nhimbe Fresh Exports, one of Zimbabwe’s largest vegetable and fruit exporters. The company, which predominantly exports to the US and Europe and entered Dubai last year, aims to move 500,000 tonnes of produce into the UAE market. 

Ambassador Mazemo also highlighted “large investments” from the UAE in clean energy projects, especially in the field of solar energy.

He said Zimbabwe was committed to action on climate change. “The goal is to protect agricultural products from drought, which is a major contributor to the country’s economy,” Mazemo said.

Latest figures from the Dubai Chamber of Commerce show southern Africa is fast emerging as a vital export destination for Dubai-based companies.

The emirate recorded an 81 percent year-on-year growth in exports to the region, to reach AED477.2 million ($130 million) in the first half of 2023.

This was up from AED264 million in the year-earlier period, making southern Africa the fastest-growing region for the emirate’s exports.

Despite challenges including rampant inflation and excessive costs related to trade sanctions, Zimbabwe’s economy had growth of 6.5 percent in 2022. 

GDP growth is projected to slow this year and will be driven mostly by agriculture and services, particularly tourism, according to the World Bank.