Zimbabwe was on the path to middle-income status in the 1990s, but then suffered from cycles of political and economic crises for nearly two decades. During this period, gross domestic product (GDP) declined by 96% and the country experienced record hyperinflation. Critical services including health care, water supply and sanitation, property rights and the investment climate were severely affected. Zimbabwe’s ranking on the Human Development Index fell to 173 out of 187 countries in 2011, when the poverty headcount reached 72.3%, with 22.5% of the population in extreme poverty. A lengthy isolation from the international community restricted the level of aid and saw a build-up of arrears to the majority of its multilateral and bilateral partners.

In 2009, the country embarked on a period of stabilization and growth ushered in by a political settlement and the adoption of a multi-currency regime, in effect dollarizing the economy. During 2009-12, the economy rebounded with growth rates averaging around 8.7%. Inflation stabilized; revenues and bank deposits recovered sharply. The country also embarked on its first Staff Monitored Program with the International Monetary Fund (IMF) which was completed in November 2014.

Social services have been recovering owing to a resurgence of both public and donor spending, and the rebound of many of its social institutions toward their earlier levels of sophistication.  The Human Development Index recovered to 156 in 2014 and a Multi-Indicator Cluster Survey in 2014 revealed that in several key areas, Zimbabwe has regained outcome levels of the early 1990s. 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 ratio declined from 960 deaths per 100,000 live births in 2010-2011 to an estimated 614 deaths in 2014. HIV/AIDs prevalence is now around 15%, down 27% in 1998. Under-five mortality fell from 94 per 1,000 in 2009 to 75 in 2014.  Nevertheless the progress remains slow and Zimbabwe has not achieved a significant number of the Millennium Development Goals (MDGs).  

Since 2012, however, the economy has experienced a dramatic slowdown owing to deteriorating terms of trade, adverse weather and increasing policy instability. Growth slowed to 4.5% in 2013, 3.2% in 2014, and is projected at 2.8% in 2015. The banking sector saw a sharp increase in non-performing loans as business adjusted to new external conditions. Poor rains in 2013 and 2015, declining commodity prices and terms of trade with South Africa (Zimbabwe’s main trading partner) together with an unfinished structural transformation in its productive sector have created a maelstrom for the economy. Having dollarized, Zimbabwe must see real adjustments in productivity, which take time and financing, in order to regain its competitiveness in the global marketplace. But the large international arrears constrain financial flows into Zimbabwe for both the public and private sector. 

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 a further renewal of institutional and operational capacity in the public sector, critical improvements in basic service delivery as well as deep reforms in economic policies and investment climate. 

Recent developments

In 2013 Zimbabwe adopted a new Constitution and is in the process of aligning its laws and regulations to this new framework. The government prepared a development plan, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIMASSET) and has embarked on a series of reforms aimed to further lay the base for economic growth and poverty reduction. 

The government has also embarked on a program to normalize relations with the international community. Besides successive Staff Monitored Programs (SMPs) with the IMF, the government has been making token payments to its preferred multilateral creditors (IMF, World Bank and the African Development Bank) since 2012. In 2014, the authorities a negotiated a new phase of its partnership with the European Union and adopted a debt strategy paper that authorizes discussion on various options to clear international arrears.

Since the 2014 Annual Meetings, Zimbabwe has continued to make positive steps in its relationship with development partners toward re-engagement with the international community.    Following a commitment made at the 2014 Annual Meetings, in January 2015, the government increased its token payments to the World Bank in pari passu with its payments to other preferred multilateral creditors. In October 2014, Zimbabwe successfully completed its second Staff Monitored Program (SMP) with the IMF (the first was completed during the Government of National Unity) and agreed a third program. In November 2014, the European Union (EU) lifted its restrictions under the Cotonou Agreement to allow direct relations with the Government of Zimbabwe and signed the first National Indicative Program with Zimbabwe in February 2015.  During this period, other development partners fielded several trade missions, including from Denmark led by the Minister of Trade and Development Cooperation, two from the UK, and one from France which met with President Mugabe. UK Permanent Secretary for Department for International Development (DfID) also visited Harare in March for the first time in many years.

Economic Overview

Despite the strong 2009-2012 economic rebound, Zimbabwe’s growth in 2014 growth is estimated at 3.1% and could inch below 3% in 2015 as the mining and manufacturing sectors remain depressed. The mining sector is dampened by easing international prices, weak investment and rising production costs. The manufacturing sector is expected to remain sluggish at 1.4% in 2015, reflecting competitiveness pressures, subdued investment and further tightening of credit conditions. Agriculture which posted a robust 23% growth in 2014 could slow down to less than 3.5% in 2015 due to inadequate financing and flooding is some areas.

Overall, risks remain tilted to the downside, due to easing of international prices of minerals, vulnerabilities in the banking sector, policy inconsistencies affecting investment, deflationary pressures, potential fiscal slippages, and the unbalanced external position.

The external position remains under pressure. Exports contracted by 8.7% in 2014, and are expected to remain depressed in 2015. Imports declined by 7.4% in 2014. The current account is estimated at 22% of GDP and could narrow to 19% in 2015. It is largely financed by short term capital inflows and remittances. Reserves are inadequate while foreign direct investment (FDI) levels remain persistently low.

Annual inflation which closed 2014 at -0.8% slipped further into the negative, to -1.3% in January 2015 reflecting continued weakening of the South African Rand and depressed aggregate demand.

Vulnerabilities are rising in the banking sector, with low liquidity levels, rising credit risks and deteriorating asset quality. Non-performing loans retreated to 16% while liquidity edged down to 27% in the fourth quarter of 2014. Broad money picked up by 12% up to December 2014, reflecting gradual improvement in confidence in the banking sector, as private sector credit inched up 4.1%.

Fiscal revenues marginally recovered by 0.8 percent in 2014, but tax revenues remain depressed by the slowdown of the economy amidst visible deflationary pressures. Government expenditure stood at $3.91 billion and remained skewed towards employment costs which absorbed 73% of current expenditure, crowding out space for capital and social expenditures. A deficit of $184 million (1.3% of GDP) is estimated for 2014 and largely financed by treasury bills. A $4.1 billion budget has been presented for 2015.

Last Updated: Mar 25, 2015

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.

In recent years, World Bank support has included the 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 response to the 2008 food crisis and others. 

In 2014, the Bank approved:

  • a new multi-donor trust fund, the Zimbabwe Reconstruction Fund to expand financial trust-funded support to investment projects,
  • a Global Environment Fund (GEF) grant to support biodiversity and participatory land use management in the Hwange-Sanyati biological corridor,
  • a Cooperation in International Waters in Africa (CIWA) grant to prepare the Zambia and Zimbabwe (ZRA) Batoka Gorge Hydro-Electric Scheme
  • an Externally Financed Ouptut (EFO) with UKaid and a grant from DANIDA to support improvements in the investment climate, including a range of reforms aimed at improving Zimbabwe’s ranking on the Doing Business indicators.
  • a FIRST Initiative grant to support Banking Regulation and Supervision; and
  • the Kariba Dam Rehabilitation Project, which supports investments by Zambezi River Authority, jointly owned by Zambia and Zimbabwe.   

The ISN III, which covers FY13-15, focuses on supporting economic recovery for inclusive growth and sets out three scenarios for future support. Resumption of full WBG financial support hinges on arrears clearance. Zimbabwe’s debt to the WBG is more than $1.2 billion, with over $900 million in arrears.

Last Updated: Mar 25, 2015

State and Peacebuilding Fund - Beitbridge Emergency Water and Sanitation project: This project has supported the Beitbridge Town Council and the Zimbabwe National Waters Authority implement an emergency response project in the town of Beitbridge, the epicenter of the 2008/9 cholera crisis that took 4,000 lives. The project provided improved water supply and sanitation services to 40,000 people and improved the sustainability of the services.

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. Between 2011 and 2014, the number of new outpatient visits to health centers in districts covered by the project went up by 80%, up from 185,000 to over 330,000 and the number of women receiving at least four ante-natal checkups monthly increased more than threefold. Other notable contributions of the program to Zimbabwe’s health sector include improvements in the Health Management Information System (HMIS) and staff motivation, strengthening results-based M&E and fostering a supportive supervision culture. Program reviews have also shown a positive trajectory towards improved equitable access to quality care as facilitated by the removal of user fees, strengthened referral and patient management.

Capacity Building

  1. The World Bank in collaboration with the African Development Bank (AfDB) and the Ministry of Finance and Economic Development held a Country Policy and Institutional Assessment (CPIA) Workshop in January 2015. This workshop discussed Zimbabwe’s performance in the annual rating exercises of the World Bank and AfDB that feed into the allocation of resources from the concessional windows of these institutions. The workshop was attended by over 150 participants from line ministries and agencies across government and presentations were made by a broad range of line ministries on areas of reform to boost Zimbabwe’s performance on the 18 areas of policy and institutional development. The Minister of Finance, Hon. Patrick Chinamasa gave the key note address and Ms. Punam Chuhan-Pole Lead Economist from World Bank’s Africa Region Office of the Chief Economist for the Africa Region, provided the main presentation.
  2. The Bank is supporting the Government of Zimbabwe to modernize the Public Procurement System. This includes support to reforming the institutional and legislative framework with procurement decentralized to spending agencies and building the capacity of the spending agencies. This will be complemented with the introduction of e-government procurement.  During the past six years, the World Bank has also helped inform this initiative by producing the 2011 Country Procurement Assessment Report (CPAR). The roadmap for the reform process is expected to culminate in the enactment of a new Procurement Law by June 2015. 
  3. Public Financial Management Technical Assistance Project (PFMTAP) with funding from the A-MDTF, the PFMTAP assisted the Public Accounts Committee (PAC) of the Parliament of Zimbabwe to improve its oversight over public financial management (PFM). This was conducted through training sessions for members of the PAC and the secretariat.  The debates that followed the tabling of public accounts in Parliament have been reported verbatim in the Parliamentary Hansard. At the end of the third continuous sitting of the PAC, 32 audit reports had been considered instead of the 20 that was planned.

Analytical Work

Under the Analytical Multi-donor Trust Fund, the World Bank produced several studies and reports.  Some of the more recent include:

  1. Climate Change and Water Resources Planning, Development and Management in Zimbabwe Report: The World Bank is working with the Government to address threats and their implications for water availability by integrating sustainable water development and management into national strategies.  The report examines water management in Zimbabwe through case studies from cities, irrigation and power projects and suggests a range of adaptation measures. 
  2. Zimbabwe Small Towns Water Supply Improvement Project Needs Assessment Report: With support from the World Bank, the Zimbabwe National Water Authority (ZINWA) carried out a needs assessment of 50 selected stations out of 500 ZINWA water supply stations that provide water to small towns and rural centers.  The aim was to areas needed to restore the functionality and improve sustainability of the water supply systems.
  3. Zimbabwe National Water Authority (ZINWA) Strategic Gap & Skills Audit Report: The Bank is assisting ZINWA in developing a leadership competency model and a strategic workforce planning methodology which will help determine future workforce and skills requirements needed to execute its business strategy. 

Last Updated: Mar 25, 2015

During 2008-13, the World Bank Group (WBG) supported Zimbabwe through an Analytical Multi-Donor Trust Fund (A-MDTF) which was financed by AusAid, Canadian CIDA, DfID (UK), the European Union, GIZ (Germany), Swedish SIDA, USAID, and the Governments of Denmark, Finland, the Netherlands, and Norway with approximately $22 million. The AMDTF supported more than 40 activities focused on economic governance including public financial management, infrastructure, and agrarian issues that are feeding into new policies and programs to help Zimbabwe resuscitate its economy, strengthen basic service delivery and improve its institutions.

In 2013, the World Bank developed a five-year program for (2014-2019), the Zimbabwe Reconstruction Fund (ZIMREF), which will support the government in the implementation of the ZimAsset. ZIMREF currently has commitments of $44 million from the European Union, GIZ, and UKaid, and the Governments of Denmark, Norway and Sweden.

The Water and Sanitation Programme (WSP) provides upstream support in water sector policy, coordination and regulation. Service Level Benchmarking of the 32 urban local authorities is providing a firm basis for prioritizing urban investments and allowing for capacity development through cross learning and knowledge generation. 

The Multi-Donor Trust Fund for Health Results Innovation (MDTF-HRI) which is supported by UKaid and the Government of Norway to roll out results-based financing (RBF) of health services aimed to improve maternal and child health (MCH). The program focuses on enhancing coverage of priority and high impact MCH services through a fee-for-services mechanism which pays health providers on the basis of quality and quantity of health services provided. The project covers at least 4.1 million people.  The implementing partner for this grant is Cordaid.

The Rapid Social Response (RSR) Trust Fund has supported Zimbabwe with $1.25 million programme which financed a pilot public works program which helped vulnerable communities build cattle dipping tanks, staff houses and an irrigation scheme. Technical assistance is being provided on National Social Protection Policy, Basic Education Module and Management Information System for Safety Nets through a $250,000 grant from the RSR.

The Global Environmental Fund (GEF) has recently approved a $5.6 million grant for the Hwange-Sanyati Biological Corridor 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. The implementing partner for this grant is World Wildlife Fund Zimbabwe.

The Cooperation in International Waters in Africa (CIWA) recently approved a $6 million grant to support preparation of the Zambia-Zimbabwe, (ZRA) Batoka Gorge Hydro-Electric Scheme.

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.  

Last Updated: Mar 25, 2015


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

*Amounts include IBRD and IDA commitments