Online Reporter
Tapiwanashe Mangwiro
Zimbabwe is pursuing membership in the Asian Infrastructure Investment Bank (AIIB), an international development finance institution (DFI), to unlock cheaper long-term capital for infrastructure, industrialisation and private sector expansion.
Zimbabwe cannot borrow from traditional multilateral lenders like the International Monetary Fund and World Bank because of unpaid debts (arrears) and unsustainable overall debt.
International lenders block new loans until a country clears its past debts and creates a plan for economic stability.
It is, however, not just about numbers—the restrictions on borrowings are also highly political.
Under its sanctions law, the Zimbabwe Democracy and Economic Recovery Act (ZIDERA), the US government opposes any new loans, credit extensions, or debt cancellation for Zimbabwe from multilateral institutions.
Because the US holds voting blocks and effective veto power within these multilateral financial institutions, its mandated opposition acts as a major roadblock to concessional finance from the Bretton Woods financiers.
Zimbabwe’s pursuit of AIIB memberships comes after the country recently entered formal negotiations to join the New Development Bank (NDB), another fledgling development financier, also known as the BRICS Bank, to widen access to cheaper long-term development finance.
The southern African country formally applied to join the BRICS New Development Bank in 2023 and commenced formal negotiations this year.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube, said the Government had intensified engagements with the emerging multilateral lenders to expand financing options for the economy.
Speaking to journalists on Wednesday after attending the World Economic Forum Annual Meeting of the New Champions in Dalian, China, Minister Ncube said membership of the two institutions would enable the Government and local companies to access more affordable funding.
“We have applied to join the BRICS Bank and that membership application is being considered and processed,” he said.
“I also visited the Asia Infrastructure Investment Bank with a view to getting Zimbabwe to join this bank. The idea is to always have choices and alternatives for sourcing capital for both our private sector and sovereign debt.”
With over 110 approved members worldwide, AIIB operates with US$100 billion in authorised capital. China and India remain the top two shareholders.
AIIB has surpassed US$70 billion in total approved financing across more than 360 projects since it began operations in 2016.
Minister Ncube said efforts to join AIIB and BRICS Bank were not intended to replace traditional lenders but diversify funding sources at a time when African countries are facing rising borrowing costs and limited access to concessional finance.
