Zimbabwe’s strong recovery from the hyperinflation and economic contraction during 2000-2008 period has encouraged hopes 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 and terms of trade shocks resurfaced. In 2013, Zimbabwe adopted a new Constitution and prepared 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 battered the Zimbabwean economy contributed to the sharpest drop in gross domestic product (GDP) of any peacetime economy (nearly halving), and poverty rates rising to over 72%, with over 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) ranking fell to 173 out of 187 countries. A lengthy isolation from the international community restricted aid flows and saw a build-up of arrears to 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) and began making token payments on arrears to multilateral institutions.

With help from resurgent public and donor spending, social services have been recovering. Many social institutions are rebounding toward their earlier levels of sophistication. Zimbabwe’s HDI ranking 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. Underpinning this is also a reduction in HIV prevalence to around 15%, down from over 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. Nevertheless, Zimbabwe missed a significant number of the Millennium Development Goals.

However, since 2012 the rebound has slowed, held back by deteriorating terms of trade (especially the drop in the South African rand, in Zimbabwe’s main trading partner), adverse weather, and continued political uncertainty. Growth fell to 4.5% in 2013, 3.2% in 2014, and projections of 1.5% or less in 2015. The balance of payments deficit remains over 20% of GDP, hampered by softening minerals prices and the impact of uneven rains on agricultural output. Deflation has set in, -2.8% for June 2015. The banking sector remains fragile, with low liquidity and continuing concerns over non-performing loans.

Having dollarized, Zimbabwe must see real adjustments in productivity, which take reformsand 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, further improvements in basic services, delivery as well as deep reforms in economic policies and investment climate. 

Last Updated: Sep 15, 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.

The ISN IIIFY13-15, 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 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 WBG approved:

  • the Zimbabwe Reconstruction Fund (ZIMREF) multi-donor trust fund to expand financial trust-funded support  to investment projects and government-executed activities.  To date, ZIMREF has mobilized approximately $43 million is currently supporting projects in the public financial management, investment climate and the water sector. 
  • a Global Environment Fund (GEF) grant($6 million) to support biodiversity and participatory land use management in the Hwange-Sanyati biological corridor;
  • a Cooperation in International Waters in Africa (CIWA) grant ($6 million) to prepare the Zambia and Zimbabwe (ZRA) Batoka Gorge Hydro-Electric Scheme;
  • an Externally-Financed Ouptut (EFO) with UKaid (GBP0.5 million) and a grant from DANIDA ($1 million) to support improvements in the investment climate, including a range of reforms aimed at improving Zimbabwe’s ranking on the Doing Business indicators;
  • a multi-donor trust fund for the Centre for Coordination of Agricultural Research and Development for Southern Africa (CCARDESA) for which Zimbabwe is eligible to receive subgrants;
  • a FIRST Initiative grant ($0.4 million) to support banking regulation and supervision; and
  • the Kariba Dam Rehabilitation Project ($75 million to Zambia), which supports investments by Zambezi River Authority, jointly owned by Zambia and Zimbabwe. 
The WBG is also preparing a second African Centers of Excellence project (ACE II) which would include Zimbabwe with resources mobilized from other donors.

Last Updated: Sep 15, 2015

State and Peacebuilding Fund: Beitbridge Emergency Water and Sanitation project: This project 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. Over the recovery period, Zimbabwe saw dramatic improvements in MCH indicators in general, but faster rates of improvement in RBF districts for key indicators. In particular, RBF districts had a 13 percentage point improvement in the in-facility delivery rate; 12 percentage point improvement in post-natal care coverage; and significant improvement in the quality of select ANC services.

Business Environment and Enterprise Performance: A series of World Bank technical assistance for regulatory reform in the financial sector has helped to create the building blocks for an improved regulatory capacity.  Support for a National Risk Assessment for Anti-Money Laundering and Combatting Terrorism Financing in 2014, helped see Zimbabwe delisted from the OECD list of non-responsive states.   The government has recently enacted amendments to its Banking Act, Deposit Insurance Act among others that reflect findings of the recent Report and Observations on Standards and Codes in Insolvency and Creditor Rights, and Consumer Protection and Financial Literacy Diagnostic. 

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. The audit reports have helped to uncover malfeasance in state owned enterprises and resulted in several judicial actions, and seen a number of public officials convicted.  Finally, the 2014 Audit Report was submitted to Parliament within the deadline in 2015 and has generated wide coverage in the media.  

Last Updated: Sep 15, 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: Sep 15, 2015


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

*Amounts include IBRD and IDA commitments