Zimbabwe’s recovery from decades of contraction has faltered, and the economy faces serious challenges due to external and policy shocks. Growth has slowed sharply from the average 8% during 2009-12, caused by significant shifts in trade (commodity price declines and appreciation of the US dollar) and a series of major droughts. The economy is projected to grow by 0.4% in 2016 owing to the impact of El Nino, devaluation of neighboring currencies and severe cash shortages following an ill-timed fiscal expansion. Extreme poverty which was estimated to have fallen during 2009-14, is projected to have risen substantially in the past few years.

However, fundamentals for growth and poverty reduction are strong, provided the country can tackle its political fragilities and build a consensus around inclusive and competitive investment policies.

The political and economic crises that characterized the economy between 2000 and 2008 nearly halved its gross domestic product (GDP), the sharpest contraction of its kind in a peacetime economy raising poverty rates to more than 72%, with a fifth of the population in extreme poverty. Health, education and other basic services, once regional models, largely collapsed and Human Development Index (HDI) in 2011 stood at 173 out of 187 countries. A lengthy isolation from the international community had restricted aid flows resulting in build-up of arrears to multilateral and bilateral partners.

In 2009, the country adopted a multicurrency regime (dollarization) that ushered in macroeconomic stability and positive economic growth. During 2009-12, the economy rebounded, with growth rates averaging around 8.7% per year. Inflation stabilized; revenues and bank deposits recovered sharply. The country also began making token payments on arrears and embarked on a series of Staff Monitored Programs with the International Monetary Fund (IMF).

Social services recovered amid resurgent public and donor spending. Zimbabwe’s HDI ranking recovered to 155 in 2015, and a Multi-Indicator Cluster Survey in 2014 revealed that in several key areas, Zimbabwe has regained outcome levels of the early 1990s. Underpinning this is a reduction in HIV prevalence to around 15% since 2014 down from more than 40% in 1998. Life expectancy recovered from a low of 43.1 in 2003 to 53.3 in 2012 (compared with a high of 61.6 years in 1986). The maternal mortality rate declined from 960 deaths per 100,000 live births in 2010-2011 to an estimated 614 deaths in 2014; under-five mortality fell from 94 per 1,000 in 2009 to 75 in 2014. Despite this, Zimbabwe missed a significant number of the Millennium Development Goals.

In 2015, Zimbabwe proposed a plan to clear arrears and resume much needed financing from, International Financial Institutions during 2016. However, delays in implementing this plan and undertaking corrective fiscal reforms have contributed to the declining market confidence and sharp economic slowdown. More recently, growing dissatisfaction with economic and social challenges have seen a rise in public protests and a resurgence in political fragilities. 

Zimbabwe still has enormous potential for sustained growth and poverty reduction given its generous endowment of natural resources, existing stock of public infrastructure and comparatively skilled human resources. Realizing this potential will require prompt action to correct fiscal policies, re-stabilize the monetary system, and resolve arrears to international lenders which would allow for a resumption of development financing. It will also require the continued renewal of institutional and operational capacity in the public sector as well as deep reforms in the investment climate.

Last Updated: Oct 04, 2016

World Bank Group (WBG) assistance to Zimbabwe totaled $1.6 billion between 1980 and 2000. Since 2000, when direct lending was suspended on account of payment of arrears, the World Bank has maintained support for Zimbabwe through a variety of non-lending instruments and trust funds. This support has been governed by three successive Interim Strategy Notes (ISNs) presented to the Board in in August 2005, April 2007, and April 2013.

The ISN III FY13-15, focuses on supporting economic recovery for inclusive growth and sets out scenarios for future support. Resumption of full WBG financial support hinges on arrears clearance. Zimbabwe’s debt to the WBG is more than $1.4 billion, with over $1.1 billion in arrears.

In the meantime, WBG support has been financed by trust funds, including Zimbabwe Reconstruction Fund (AZIMREF), the predecessor Zimbabwe Analytical Multi-Donor Trust Fund (A-MDTF), the Multi-Donor Trust Fund for Health Results Innovation (MDTF-HRI), the Water and Sanitation Programme (WSP), the State and Peacebuilding Fund, the Global Environmental Facility Trust Fund, Cooperation in International Waters, Financial Sector Reform and Strengthening (FIRST) and others .

Between 2015 and 2016, under ZIMREF, the following initiatives began implementation:

  • Results-Based Budgeting Technical Assistance Program ($1.3 million) supports the implementation of program-based budgeting across all central government line ministries by 2019, provides technical assistance to the Ministries of Health and Child Care and of Primary and Secondary Education to support programs aimed to strengthen planning, and implementation of cost-effective reforms. 
  • Capital Budgets Technical Assistance Program ($4.2 million) supports the improvement of state-owned enterprise governance, public investment planning and management, and some feasibility studies.
  • Poverty Monitoring and ZimASSET Monitoring and Evaluation Technical Assistance Program ($2.5 million) supports statistical capacity building, the next household survey and the development a government-wide monitoring and evaluation framework;
  • Public Procurement Modernization Project ($3.5 million) supports the alignment of the public procurement legislation and institutional framework to the new Constitution, and the development of an e-Government Procurement pilot.  
  • Public Financial Enhancement Project ($20 million) aims to improve financial reporting, internal controls, fiscal transparency and accountability in government finances in Zimbabwe.
  • National Water Project ($20 million) aims to improve access and quality of water and sanitation services in selected growth centers, improve water resources planning and support the reform of the water sector nationally
  • Business Environment, Financial Sector and Investment Policy TA ($3.2 million) aims to improve the business climate for the private sector, especially for micro enterprises, SMEs and agricultural small holders

Last Updated: Oct 04, 2016

Multi-Donor Trust Fund for Health Results Innovation (MDTF-HRI): Improvements have been noted in the availability, accessibility and acceptability of MCH services since the inception of the program.  To date over 580,000 women have accessed antenatal care, over 100,000 women living with HIV have received anti-retroviral to reduce mother to child transmission and over 550,000 children have been immunized under Results Based Financing

Bank Resolution and Crisis Management Strengthening has assisted in Bank Supervision and Deposit Protection. The TA has also assisted with input into the review of the now amended Banking Act. 

Technical and Analytical Work

With funding from the Zimbabwe Reconstruction Fund, (and building on earlier funding from DfiD, USAID’S SERA and AfDB), the Ministry of Finance and Economic Development led the pilot preparation of program budgets for the Ministry of Primary and Secondary Education, the Ministry of Health and Child Care and the Ministry of Public Service, Labor and Social Welfare. For the 2017 National Budget, six more line ministries will be assisted to provide program budgets.

As efficient and integrated agricultural markets are an important vehicle for growth and poverty reduction, a working paper Economic growth notes: spatial integration in Zimbabwean product markets was developed to provide evidence on the level of integration between Zimbabwe’s domestic markets for grain and staple foods.

The Assessment of the Zimbabwe Public Financial Management System for Investment Lending Projects was undertaken under the leadership of the Ministry of Finance and Economic Development (MOFED) to assess fiduciary risks in using country financial management (FM) systems in full, or in part, for implementing Donor and Bank-financed investment projects in Zimbabwe and to identify risk mitigation measures required for such use.

The World Bank launched the first edition of its Zimbabwe Economic Update (ZEU): Changing Growth Patterns, Improving Health Outcomes. The ZEU aims to provide a new perspective on the macroeconomic issues facing the nation, and focuses on key developments in a particular sector. 

Last Updated: Oct 04, 2016

In 2014, the Board of Executive Directors of the World Bank approved the Zimbabwe Reconstruction Fund (ZIMREF), a country-specific umbrella-type multi-donor trust fund that contributes to strengthening Zimbabwe’s systems for reconstruction and development with a focus on stabilization and reform, reconstruction, development and poverty alleviation. ZIMREF is the key instrument for implementing the World Bank Third Interim Strategy Note for Zimbabwe and for supporting the implementation of Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset) in a five-year program for (2014-2019). ZIMREF has received $39 million funding from Denmark, European Union, Norway, Sweden, Switzerland, UK and the World Bank’s State and Peace Building.

An additional financing grant of $10 million from the Health Results Innovation Trust Fund (HRITF) will complement Zimbabwe’s ongoing Health Sector Development Project that supports the introduction of Results-Based Financing (RBF) in rural and low-income clinics. The project is increasing the coverage of key maternal and child health interventions in 18 targeted rural districts serving over 4.5 million people and expanding community involvement in health care management at the local level. This additional financing will bring HRITF’s contribution to $35 million, and the Government of Zimbabwe’s financing to $10 million. The new resources will help to expanding the coverage of the RBF to new health care services, deepen the focus on quality of care, and extend the project through February 2017. Cordaid is the implementing partner for the grant.

Development partners also include:

  • The Cooperation in International Waters in Africa (CIWA):  $6 million grant to support preparation of the Zambia-Zimbabwe, (ZRA) Batoka Gorge Hydro-Electric Scheme.
  • The Water and Sanitation Programme (WSP) provides upstream support in water sector policy.
  • The Global Environmental Fund (GEF): $5.6 million grant for the Hwange Sanyati Biological Corridor Project to develop land use and resource management capacity of local communities and support investments in alternative livelihoods, improved forest management, and to reverse land degradation, implemented by the World Wildlife Fund Zimbabwe.
  • The Government of Denmark and UKaid are supporting International Finance Corporation (IFC’s) Conflict and Affected States in Africa (CASA) with a specific grant of just under $1 million and an Externally Financed Operation (EFO) for $1 million for work on Doing Business reform agenda and small and medium enterprise development in Zimbabwe.  
  • The Global Facility for Disaster Reduction and Recovery (GFDRR): is funding a Natural Disaster Risk Reduction disaster project in the Kariba District with grant financing of just under $500,000.
  • The Financial Sector Reform and Strengthening (FIRST) Initiative Strengthening Bank Resolution and Crisis Management Technical Assistance: $200,000 funding to  assist the authorities in strengthening their bank resolution capability, improve crisis preparedness and management, and help increase the resilience of the deposit insurance mechanism in order to help strengthen financial sector stability in Zimbabwe. 

Last Updated: Oct 04, 2016


Zimbabwe: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments