The aim of this Country Brief for Zimbabwe is to update the Board of Directors on recent developments in Zimbabwe as well as serve as a programming instrument for the Bank’s intervention in the country in 2011-13. The Bank has supported Zimbabwe’s recovery over the past two years in line with the recommendations made in the Country Brief 2009/10 (ADF/BD/WP/2010/Approval) that was approved by the Board of Directors in 2010. Assistance provided comprised mainly of technical assistance and institutional capacity building funded with grant resources from Pillar III of the Fragile States Facility (FSF) of which some 90 percent of committed funds have been disbursed. The support was targeted at improving economic governance and enhancing the effectiveness of public service delivery.
Zimbabwe started on a new political path with the signing of the Global Political Agreement (GPA) in 2008, even though its implementation has been uneven. The economic reforms implemented since the signing of the GPA have borne positive results for the economy. Real GDP grew by about 6% in 2009 and is estimated to have grown by 9% in 2010. The adoption of the multi-currency regime along with the tightening of fiscal policy stance through the implementation of a cash-based budget system has helped Zimbabwe to bring down inflation to the commendable level of 3.0% by end-April 2011. In the medium term, Zimbabwe’s prospects and performance will be largely determined by political developments and how these impact the economy. Key reforms aimed at addressing external indebtedness and improving the investment climate especially in the areas of property rights, indigenization and land reform, will also be vital if the economy is to continue to make progress.
Over the past year, the Zimbabwean Authorities have also implemented several structural reforms aimed at stimulating the economy and increasing domestic revenue. These included appointing a new Board for the Reserve Bank of Zimbabwe (RBZ), identifying ten public enterprises for restructuring, commercialization or privatization, commencing the Land Audit and conducting a Country Integrated Fiduciary Assessment (CIFA) and an Assessment on the Report on the Observance of Standards and Codes (ROSC) focusing on accounting and auditing. In addition, the Government has adopted a Debt Resolution Strategy.
The total allocation to Zimbabwe from FSF pillar III was UA 4,005,795. The amount approved for operations thus far is UA 2,784,912, leaving a balance of UA 1,220,883. Annex 1 provides details of amounts disbursed for various activities relative to commitments. The total undisbursed balance is UA 1,498,427of which UA 1.0 million has been committed to financing the Procurement Agent of the ZIMFUND and the balance has been committed to support other capacity building activities (Annex 3).With the utilization of this balance, there are no additional resources available to Zimbabwe in the current ADF 12 cycle. This notwithstanding, the Government has requested for technical assistance support in other areas including Public Financial Management and Public Private Partnership frameworks (Annex 4).
The Bank has recently reopened a field office in Zimbabwe which has helped strengthen it’s engagement with the Government. In addition, the Bank will continue to implement emergency infrastructure projects funded by the Africa Water Facility (AWF) and other operations supported from the Zimbabwe Multi-donor Trust Fund (ZIMFUND). Further, the Bank will explore opportunities to support economic recovery and reengagement through private sector operations.
To deliver on the mandate entrusted to the Bank, the AfDB will remain engaged in Zimbabwe over the next two years to consolidate the assistance and progress already made and to help avoid policy reversals. Additional resources for Zimbabwe will be necessary for the Bank to sustain its engagement. In this regard, Management requests the Board to approve for Zimbabwe: Exceptional eligibility under FSF Pillar I to support capacity building in public financial management, debt management, legal frameworks for public private partnerships, and in domestic resource mobilization as described in Annex 4.
* Readers can access the 22 page document, Zimbabwe: country brief 2011-2013, here. It was prepared by: Regional Department, South A (ORSA), Vice President, Regional Operations (ORVP) and Fragile States Unit (OSFU), Vice President, Sector Operations (OSVP).