Mthuli eyes mineral-backed debt deals

SAMANTHA MADE

Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube has revealed that Zimbabwe is preparing to leverage its vast mineral resources, including platinum, gold and lithium, to settle part of its ballooning US$13.2bn external debt, as the debt overhang continues to suffocate the economy.

“When it comes to strategies for paying off Zimbabwe’s external debt, we are certainly considering natural resources. There are certain structures that we will put in place,” Professor  Ncube said.

He confirmed that Harare has already begun servicing arrears through a platinum-backed arrangement.
“We already have one structure involving platinum in place, which we have been utilising to service some of the external debt,” he said, adding that the government intends to expand such mechanisms to “fully leverage natural resources to deal with some of the debt.”

Zimbabwe’s debt crisis has become one of the biggest obstacles to growth, investment, and social development.

With total public and publicly guaranteed debt at US$21.5bn as of December 2024, equivalent to 47.1% of GDP, the economy remains locked out of international capital markets.

Of this, US$13.2bn is external debt, while US$8.3bn is domestic debt. More than 70% of external arrears stem from interest, deepening debt distress and leaving the country unable to access fresh concessional financing for over two decades.

The debt burden has translated into harsh economic consequences.

Zimbabwe owes US$1.48bn to the World Bank, US$671m to the African Development Bank (AfDB), US$372m to the European Investment Bank, US$3.55bn to Paris Club creditors, and US$2.22bn to non-Paris Club lenders.

Failure to clear these arrears has left the country cut off from the International Monetary Fund (IMF) and other multilaterals.

Zimbabwe has repeatedly attempted to mend ties with international lenders, but efforts have faltered.

The most high-profile attempt was the 2015 Lima Strategy, under which Harare pledged to clear arrears with the IMF, World Bank, and AfDB.

In 2016, Zimbabwe paid overdue obligations to the IMF, but arrears to the World Bank and AfDB persisted, blocking access to new concessional loans.

More recently, the African Development Bank, under President Dr. Akinwumi Adesina, has championed a fresh arrears clearance plan, proposing a US$2.6bn bridge financing facility backed by guarantees from development partners. But the plan has stalled amid concerns over governance reforms and policy credibility.

Against this background, Professor Ncube’s resource-backed repayment strategy reflects Harare’s pivot toward alternative instruments.
“The idea is to structure these around specific projects, around project finance arrangements. That’s the best way. We will be able to say more as we go forward,” Professor Ncube said.

Analysts warn that mortgaging mineral wealth could entrench short-term fixes while leaving Zimbabwe vulnerable to commodity price swings.

Johnson Moyana, a Harare-based economist, noted:
“Zimbabwe has often turned to short-term fixes instead of lasting reforms. Using mineral resources to service debt could provide temporary relief, but unless the government addresses structural weaknesses and governance issues, this approach will not deliver sustainable debt resolution.”

Debt campaigners also raise transparency concerns.

According to the African Forum and Network on Debt and Development (AFRODAD):
“Zimbabwe’s high debt service requirement inhibits future investment in social expenditure, thereby perpetuating low productivity and poverty.”

Beyond external arrears, Zimbabwe’s domestic debt has surged to 37% of GDP, far above the regional average of below 20%. Persistent budget deficits, quasi-fiscal activities by the central bank, and sharp currency depreciation have added pressure on public finances.

This mounting debt has squeezed fiscal space, forcing the government to divert scarce revenues away from infrastructure, social services, and productive investment, further depressing growth.

The proposed deal could  offer both economic breathing room, analysts said.

Zimbabwe sits on one of Africa’s richest resource bases, including the world’s second-largest platinum reserves and vast lithium deposits critical to the global green energy transition.

But success will depend on whether these resources can be harnessed sustainably.

Analysts said weak governance, policy inconsistency, and corruption remain stumbling blocks that could undermine the credibility of the plan.

As Zimbabwe’s debt remains a chokehold on the economy, and Ncube’s mineral-backed gamble could either prove a turning point or add another chapter to a long history of failed debt strategies, analysts said.