NATHAN GUMA
PRESIDENT Emmerson Mnangagwa says Zimbabwe is now ready to join the Brics grouping as it has a stable currency, but economic analysts argue that the country is yet to meet the basic fundamentals of a stable economy.
Brics — short for Brazil, Russia, Inda, China and South Africa — has evolved from a group promoting investments into a geopolitical bloc positioning itself as a counterweight to North America and the European Union. It now also includes Iran, Egypt, Ethiopia and the United Arab Emirates.
Zimbabwe, which has been isolated due to a poor human rights record, has been using every opportunity to re-engage, and is eyeing admission to the Brics bloc.
Mnangagwa has been pinning hopes of admission to the Brics grouping on the Zimbabwe Gold currency, introduced in April by the Reserve Bank of Zimbabwe (RBZ) — replacing the Zimbabwe dollar which was continually shedding value against the United States dollar.
“I have discussed this with my dear brother, President Putin, that I think we are now ready to join because we now have a solid currency in Zimbabwe. And our economy is now based on solid fundamentals of economics. So we now know that we fulfill the requirements to qualify to join the Brics,” Mnangagwa told Russian media Sputnik Africa on the sidelines of the St Petersburg International Economic Forum (SPIEF2024) on 8 June.
“When we apply, the Brics will interrogate our economy and the basis of the approach of which we are applying. We are suffering from the fluctuations of an incurred currency. So one time, you know, the inflation could fly in our face. We decided that we need a currency, a solid currency based on our gold reserves. And, that is what we have done. So our currency is now called ZIG, which is Zimbabwe Gold.”
While Mnangagwa said Zimbabwe is ready, economic analyst Professor Gift Mugano said Zimbabwe is yet to meet the fundamentals of a stable economy, with the new currency not yet fully available on the market.
“I would like to say that Zimbabwe has a right to join any trading bloc because that gives us an opportunity to have a bigger market to sell its commodities. But the question is do we have the right fundamentals in place to participate in the Brics? The answer is no,” Mugano told The NewsHawks.
“The argument which was just put forward by the President is focusing on the currency issue only. But even on that, we still have challenges. The ZiG was just launched one month ago and it has not made much traction. That is the honest truth.”
“Then of course the value of the ZiG is not there in the market. Banks are finding it difficult to access foreign currency. So ZiG is still fragile and it is not a strong currency. That is the reality on the ground. But now, what I would want the country to look at, particularly the government to look at, is not just a current issue. It is a capacity issue, over and above the currency.”
Mugano also said Zimbabwe has been down in terms of production, which has seen a fall in exports.
“We have a drought of production, serious challenges in terms of production. We can’t feed ourselves. We are importing virtually everything. So what are we going to be exporting to the Brics?” he asked.
“The Brics with Russia, Brazil. Brazil dominates the world markets in terms of commodities, agrarian commodities. So if we are opening ourselves for Brazil, are we ready for that competition? We used to suspect that South Africa imported chickens from Brazil and repackaged it, and at some point we banned the import of chicken to protect our poultry industry.”
“Now, if we are going to join the Brics, we are opening ourselves again for the competition directly, head-on with the Brazilians. Do we have the capacity to compete with them?”
Economist Dr Prosper Chitambara said there is still a lot of work to be done to ensure macro-economic stability, which is fundamental for the country to join Brics.
“Yes, the last month we have seen the inflation rate has actually come down quite significantly. But what we need to do is to sustain a low and stable inflation rate of below 10% for at least six months to 12 months,” Chitambara said.
“If we are able to sustain a low and stable inflationary environment, definitely that will result in a restoration of confidence, not just in the local currency but even in the economy in general because high inflation erodes economic confidence.”
