The World Bank in Zimbabwe

Zimbabwe has strong foundations for accelerating future economic growth and improving living standards. The economy has excellent human capital, comparable to that of upper-middle-income economies in Sub-Saharan Africa, although some skill shortages are emerging in some sectors. Moreover, Zimbabwe possesses abundant mineral and natural resources that, if well managed, can support the country’s development objectives.

Zimbabwe’s economic development continues to be hampered by price and exchange rate instability, misallocation of productive resources, high informality, low investment, and limited structural transformation. Economic growth has been volatile over the past decade. High inflation, multiple exchange rates, and unsustainable debt levels have increased the cost of production, reduced incentives for productivity-enhancing investment, and encouraged informality. Trade integration has declined, and foreign direct investment (FDI) remains low, limiting the transfer of new technologies and investment in modernizing the economy.

High unsustainable debt and arrears to international financial institutions (IFIs) limit Zimbabwe’s growth potential. The government has prepared an Arrears Clearance, Debt Relief, and Restructuring Strategy, resumed token payments to IFIs and Paris Club creditors, and initiated a structured Dialogue Platform with creditors and development partners with the aim to agree on a program of economic, governance, and land reforms.

Real GDP growth is estimated to have slowed to 3.4% in 2022 from 8.5% in 2021 on the back of worsening agriculture conditions and macroeconomic instability. Due to low rainfall, agricultural output contracted by 14%, after growing at double digits in 2021. Triple-digit inflation constrained private sector demand, while fiscal austerity limited growth of government demand and investment. Mineral exporters benefited from high global prices and, together with tourism, contributed the most to overall economic growth.

Inflation returned to triple digits, albeit declining since August 2022, fueled by broad money expansion and a surge in global prices. The war in Ukraine, through high food and energy prices, has exacerbated domestic inflationary pressures that emanated from loose monetary policy and quasi-fiscal operations. Annual inflation returned to triple digits in May 2022 and reached 244% in December 2022. However, monetary tightening, including sharp hikes in interest rates, and fiscal policy measures brought inflation down to 230% in January 2023. Despite still high inflation, the Central Bank reduced the interest rate from 200% per annum to 150% in February 2023.

The fiscal deficit was contained to 1.5% of GDP in 2022, but quasi-fiscal operations continued.  Additional spending, mostly on public investment, procurement of grain, and social protection, was driven by inflation and was matched by higher revenue. Revenues increased, due to high inflation and exchange rate valuation gains, as some of the taxes were collected in U.S. dollars.

Key Developmental Challenges

Although extreme poverty has declined since its peak in 2020, it remains high in the context of cyclical agricultural production and elevated food prices. Persistent inflation, high dependence on low-productivity agriculture, slow structural transformation, and intermittent shocks like drought, natural disasters, and the COVID-19 pandemic have contributed to the high rate of poverty and vulnerability in Zimbabwe.

Last Updated: Mar 30, 2023

World Bank Group (WBG) assistance to Zimbabwe totaled $1.6 billion between 1980 and 2000. Direct lending has been suspended since 2000 due to failure to repay its debt. However, the WBG remains fully engaged through financing from various trust funds including the Zimbabwe Reconstruction Fund (ZIMREF), the Global Financing Facility (GFF), the Health Emergency Preparedness and Response Trust Fund (HEPRT), and the Energy Sector Management Assistance Program (ESMAP), which all fund sector-specific activities.

Following Cyclone Idai in March 2019, the WBG provided an exceptional allocation of $72 million from the Crisis Response Window of the International Development Association (IDA) for the  Zimbabwe Idai Recovery Project (ZIRP) which aims to address stages of the early recovery and medium-term disaster recovery for people affected by the cyclone.

The GFF provided $25 million in grants in additional financing towards the health sector and contributed towards its response to COVID-19. In addition, the HEPRT and ESMAP Trust Funds provided a grant of $6.6 million to the Zimbabwe COVID-19 Emergency Response Project (ZCERP) to deploy and manage  COVID-19 vaccines and to strengthen related health system capacity.

ZIMREF has provided support through a million-dollar grant to support the Zimbabwe Risk and Resilience Project, towards strengthening institutional systems and policy-related aspects of government-led disaster risk management.

The International Finance Corporation (IFC) provides technical assistance to various activities including expanding access to finance in the agricultural sector and enhancing the competitiveness of Victoria Falls, a tourism destination, through the Zimbabwe Destination Development Program. 

A Social Protection and WASH pilot project has helped keep adolescent girls in school after the COVID-19-related school closures. To do this, the pilot program funded sensitization in schools as well as cash transfers and other livelihood support for the families of adolescent girls, advice on menstrual hygiene management, and water and sanitation services.

The following programs fall under ZIMREF: 

• Fiscal and Budget Policy to improve systems for public expenditure and investment planning, resource mobilization, and development of a pipeline of feasible projects in key sectors including program-based budgeting. 
• Private and Financial Sector: Support for the National Financial Literacy Framework and the Financial Consumer Protection Framework and establishing the Zimbabwe Investment Development Agency (ZIDA) and investment policies to improve the environment for investment.
• Financial Management support to establish a public procurement framework, improve the coverage and reporting of internal and external audits, and improve parliamentary and civil society oversight. 
• Poverty Monitoring and integration into national strategy and planning documents. This included financing of the 2017 Poverty, Income, Consumption, and Expenditure Survey (PICES), release of the 2017 Poverty Report, and publication of poverty microdata for 2017 and 2019.
• Corporate Governance: ZIMREF helped to prepare the new Public Entities Corporate Governance Act, which will improve governance of state enterprises, particularly important for developing turnaround strategies in key sectors.
• Climate Change support to develop Zimbabwe’s climate policies, its pipeline of climate adaptation, and its mainstreaming of climate changes in investment planning.

Last Updated: Mar 30, 2023

Despite a challenging operating context, the Zimbabwe Reconstruction Fund (ZIMREF) has played a pivotal role in supporting legislative reforms and early reform implementation, including providing the analytic underpinnings for the development of the government’s National Development Strategy (NDS-1) for 2021-25. Key results include: (i) enactment of 22 pieces of legislation on procurement, public enterprise governance, national statistics, and business regulation; (ii) strengthened coverage of Integrated Financial Management Systems (IFMIS) at the district level and improved oversight through internal, external, and parliamentary audits; (iii) adoption of guidelines for public investment management and roll-out of results-based budgeting across all ministries, departments and agencies; (iv) increased access to piped water, better sanitation planning, and strengthened revenue collection systems; (v) operationalization of a simplified tax regime for Small and Medium Enterprises; and (vi) development of Zimbabwe’s climate policies and mainstreaming climate change in investment planning. A 2020 evaluation of ZIMREF confirmed that the trust-funded program was effective at improving capacity and systems in several critical areas, thus laying the foundation for more longer-term reforms and providing a vehicle for key stakeholders, especially the government and donors, to coordinate and maintain dialogue.

The Health Sector Development Project has increased coverage and quality of an integrated package of Reproductive, Maternal, Neonatal, Child, Adolescent health and nutrition (RMNCAH-N) services and also has accelerated progress in the National COVID-19 Response, providing technical assistance and dialogue at the national level on response and vaccine deployment.

The project has achieved the following:

• Provided more than 1 million women antenatal care services, consisting of at least one visit a year to a supported facility.
• Provided services to over 45,000 women and children under the Urban Voucher Component. 
• At least 90% of births have been attended by skilled health personnel in participating rural districts, benefiting an estimated 1.75 million women.
• Improved the quality of care at health facilities in terms of structure and process, with average scores (awarded by patients) ranging between 80% and 85% to compare favorably with previous averages that fell below 75%. At least 41% of the health facilities registered an increase in quality scores since the previous quarter at the end of December 2021.
• The Results Based Financing (RBF) program’s impact evaluation confirmed the approach resulted in faster rates of improvements in key maternal and child health indicators, for example a 13% improvement in the in-facility delivery rate and a 12% improvement in postnatal care in RBF districts, compared to those that have not yet started the approach.

For the $5 million COVID-19 component of the $25 million GFF-supported Health Sector Development Support Project, the following services and support for general COVID-19 response have to date been provided:

• Digitizing the data collection systems for COVID-19 surveillance.
• Financing contact tracing activities through a results-based mechanism.
• Logistics support for surveillance and contact tracing.
• A total 21,000 GeneXpert Cartridges for PCR COVID-19 were procured and distributed.
• Purchase of ambulances, eight sets of Intensive Care Units (ICU) , Personal Protective Equipment (PPE) for five isolation/treatment facilities, printing of Information, Education, and Communication Materials.

The Zimbabwe Idai Recovery Project (ZIRP) has been supporting post-cyclone recovery initiatives and resilience building in areas of the country worst-affected by the 2019 cyclone. Community agricultural systems have been strengthened through rigorous advisory and extension services and support services were provided to over 10,000 farmers. This, in turn, has translated to restored livelihoods, improved dimensions of agricultural systems, and a stronger value chain. This is evidenced by improved crop yields from 58 active community gardens, recording improved crop yields and earnings close to $15,320 from surplus crop harvest. The livestock production sector is also demonstrating great promise through vaccination campaigns and livestock extension services. 4,527 livestock farmers are now well-trained on animal health management. Records of low tick-borne disease load and low occurrence of animal diseases in ZIRP-targeted districts−attributed to the vaccination, deworming, and dipping campaigns−is reassuring, with farmers reporting reduced livestock morbidity and mortality by about 90%.

Last Updated: Mar 30, 2023

The World Bank Group works with a variety of partners in Zimbabwe including the African Union Development Bank, Cordaid, European Union, Sweden, UNOPS, and other U.N. agencies.

Last Updated: Mar 30, 2023