Overview

Zimbabwe’s strong recovery from the 2000-2008 hyperinflation and economic contraction period gives hope for its return to the strong socio-economic performance and middle-income prospects, of the 1990s. However, growth has slowed sharply since 2012 as the economy’s vulnerability to climate change and terms of trade shocks resurfaced. In 2013, Zimbabwe adopted a new constitution and a new development plan, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimASSET). With a relatively well-educated workforce, abundant natural resources and developed infrastructure (albeit aging), the 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 contributed to the sharp drop in gross domestic product (GDP), the first of its kind in a  peacetime economy (nearly halving) and raising poverty rates  of more than 72%, with a fifth of the population in extreme poverty. Health, education and other basic services, once regional models, largely collapsed and Zimbabwe’s Human Development Index (HDI) in 2011 stood at 173 out of 187 countries. A lengthy isolation from the international community had restricted aid flows and resulted 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 embarked on its first Staff Monitored Program with the International Monetary Fund (IMF) and began making ‘token’ payments on arrears to multilateral institutions.

Social services are recovering amid resurgent public and donor spending. Many social institutions are regaining their 1980s levels of sophistication. 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 also 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, before the full extent of the AIDS pandemic). 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.

Zimbabwe 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 requires a further renewal of institutional and operational capacity in the public sector, further improvements in basic services delivery as well as deep reforms in economic policies and investment climate complimented by arrears clearance to international lenders. 

Last Updated: Apr 07, 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 three scenarios for future support. Resumption of full WBG financial support hinges on arrears clearance. Zimbabwe’s debt to the WBG is more than $1.4 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 response to the 2008 food crisis and others.

In 2015, under ZIMREF, the following initiatives began implementation;

  • Results-Based Budgeting Technical Assistance Program ($1.3 million) under the Zimbabwe Reconstruction Fund (ZIMREF) multi-donor trust fund which 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) which 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) which will support statistical capacity building, the next household survey and the development a government-wide monitoring and evaluation framework; and
  • Public Procurement Modernization Project ($3.5 million) which supports the alignment of the public procurement legislation and institutional framework to the new Constitution, and the development of an e-Government Procurement pilot.     

Last Updated: Apr 07, 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. 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..

Business Environment and Enterprise Performance Program (BEEP)

The BEEP program has made substantial progress, particularly on the investment climate component of the program which saw the government counterpart, the Office of the President and Cabinet, intensify efforts to take on recommended reforms. The department took over the reform process from the Ministry of Economic Planning and Investment Promotion. Six technical working groups (TWGs) were established to implement the short and medium term investment climate reforms identified in the World Bank December 2013 Doing Business Memorandum.

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.
  • 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: Apr 07, 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: Apr 07, 2016


LENDING

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

*Amounts include IBRD and IDA commitments