ZIMBABWE is upping its dependence on Brics countries as a source of much-needed financial support after concessional funding from traditional international financial institutions (IFIs) dried up due to non-payment of arrears, The NewsHawks has established.
The southern African nation, saddled with an external debt of over US$14 billion, has been struggling to service its loans from multilateral lenders such as the World Bank, International Monetary Fund, African Development Bank, European Investment Bank and the Paris Club since the turn of the millennium.
In the absence of long-term loans from international financial institutions, Zimbabwe has been heavily dependent on domestic resources such as taxes and costly bilateral loans and facilities from some regional banks such as the African Export and Import Bank.
The continuing accumulation of arrears is also seriously undermining the country’s credit rating and severely compromising the country’s ability to attract foreign direct investment. It is also hampering balance of payment and budgetary support.
Early this month, Zimbabwe’s Foreign Affairs minister Frederick Shava flew to Qatar where he pushed for Zimbabwe’s admission as a Brics Bank member.
Shava had held a meeting with the minister of External Affairs and Education of India on the sidelines of the United Nations Conference on Least Developed Countries which was recently held in Doha, Qatar.
“The Ministers agreed on a mutual support arrangement in the respective campaigns for non-permanent seats in the United Nations Security Council. They also discussed bi-lateral cooperation matters and an offer to Zimbabwe for membership in the New Development Bank (formerly BRICS Bank),” reads a post-cabinet Press briefing.
Established in 2015 by Brics countries, the New Development Bank is a multilateral development bank aimed at mobilising resources for infrastructure and sustainable development projects in Brics and other emerging markets and developing countries.
The bank is headquartered in Shanghai, China, with regional offices in South Africa and Brazil. Kamath from India was the first president of the NDB (2015-2020).
Brics is an acronym referring to the developing countries of Brazil, Russia, India, China and South Africa, which are identified as rising economic powers.
Other countries that have expressed interest in joining include Argentina, the United Arab Emirates, Algeria, Egypt, Bahrain and Indonesia, along with two nations from East Africa and one from West Africa.
According to the United Nations Department of Economic and Social Affairs, South-South cooperation refers to the technical cooperation among developing countries in the Global South.
It is a tool used by states, international organisations, academics, civil society and the private sector to collaborate and share knowledge, skills and successful initiatives in specific areas such as agricultural development, human rights, urbanisation, health and climate change among other issues.
Last July, Zimbabwe launched its arrears clearance and debt management programme at a time the economy is struggling to access concessional facilities to finance capital projects.
But several political governance and economic reforms–such as the upholding of human rights and the compensation of white former commercial farmers who lost vast tracts of land during redistribution exercise–remains key to normalising relations with the international community.