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ZIMBABWE
>> Regional Overview >> Zimbabwe Overview
Development Challenge FY2001 Program /
Activity & Budget InformationSummary Tables
Program Summary
Previous Years' Activities
2000, 1999, 1998, 199700
Introduction
The United States has a national interest in supporting Zimbabwe's historical contributions to regional economic and political stability. Zimbabwe is well endowed with natural and human resources. Despite post-independence optimism regarding the nation's future and the impressive social gains of the 1980s and 1990s, in the past two years Zimbabwe's economic performance has slipped substantially. The social sectors are deteriorating and the politicians who came to power at independence in 1980 seem unable to integrate Zimbabwe into the global economy. At the same time, a dynamic political transition is occurring in Zimbabwe, particularly as it faces parliamentary elections in 2000 and presidential elections in 2002. Zimbabwe requires targeted U.S. support during this period of economic crisis and political fragility. If a peaceful and credible political transition occurs, there is great optimism that the economy will grow with increased domestic and international investment. The benefits of such growth include Zimbabwe as a vital player in an increasingly viable southern Africa regional market and a growing market for U.S. goods and services. U.S. development assistance enhances Zimbabwe's prospects of regaining its economic vibrancy in the southern Africa region. The United States is Zimbabwe's fourth leading source of imports (after South Africa, the United Kingdom and Japan), and trade flows will increase should the economy stabilize. Though Zimbabwe's continued military intervention in the Democratic Republic of Congo conflict is ill-advised, the United States values Zimbabwe's historically productive participation in regional peacekeeping activities, as demonstrated in Somalia and Angola.
USAID's development assistance strategy, approved in June 1999 for the planning period 2000-2005, focuses on aiding Zimbabwe during its current transition so its economic and regional leadership potential can be realized. USAID, with active Embassy support and involvement, is undertaking a series of strategic interventions to mitigate the current social, economic and political crises. The economic collapse is largely a result of political decision-making without participation of and accountability to the citizenry. Thus, U.S. assistance is helping civil society increase its participation in economic and political decision-making. Simultaneously, USAID supports Zimbabwe's parliamentary reform by strengthening its committee system to bring about better representation of parliamentarians' constituents. With one in four adults infected by HIV, the debilitating AIDS epidemic is Zimbabwe's greatest challenge. The United States remains the leading bilateral donor in efforts to reduce HIV transmission and is implementing a new program that has worked in Uganda--voluntary counseling and testing for HIV/AIDS. USAID also will assist disadvantaged groups of Zimbabweans, primarily in the informal sector. An expanded microenterprise program will help create an economic "safety net" and indirectly reduce the reliance on political patronage. The informal sector remains the only viable option for providing a livelihood for the poor majority.
The Development Challenge
Over the past three years, economic growth has been close to zero. Inflation rates of approximately 70%, interest rates estimated at over 75%, and a weakened currency during this period demonstrate the fragile state of the economy and the government's inability to respond. The domineering political structure of the ruling party has revealed a government that is unresponsive to the needs of Zimbabwe's citizenry and is unable to provide creative solutions to revive the anemic economy. The lack of vision and leadership has undermined expectations of Zimbabwe's ability to graduate from development assistance in 2003. Several factors, including inequitable land distribution, short-sighted economic management, legislation forced through a weak parliament due to the concentration of power in the executive branch, and underlying racial and ethnic tensions, led to the development of a revised USAID strategy to help prevent and mitigate crisis during a difficult economic and political transition. Zimbabweans are frustrated with the state of the economy and are expressing their displeasure. Civil disturbances and demonstrations are more frequent, but promising new political institutions are forming. On another positive note, in a February 2000 referendum, Zimbabwean citizens rejected a revised national constitution crafted by the ruling party that proposed increasing the powers of the President.
Post-independence assistance has helped Zimbabwe develop its education, health and agricultural infrastructure. With USAID support, dramatic gains were made in the 1980s, including increased life expectancy and immunization coverage along with decreased fertility and illiteracy rates. Nevertheless, significant problems remain. Ranked as the fifth most inequitable country in the world, the unresolved land reform problem remains the linchpin of economic and social justice. Throughout the 1990s, USAID addressed issues of equity through its private sector and low-income housing program. However, some of the problems were due to austerity-related declines in real per capita expenditures on social services. Achievements in the health sector are being significantly eroded by HIV/AIDS, which is undercutting the public health gains made since independence. Despite fertility declines and 1,200 weekly deaths due to AIDS, population growth still outpaces weak economic growth.
While Zimbabwe's external debt is not excessive, domestic debt is stifling economic growth by bidding up interest rates and crowding out the private sector. For the first time, Zimbabwe is defaulting on its international debt. Although the investment climate is somewhat improved relative to the 1980s, centralized policy decisions, including price controls on certain commodities, a fixed exchange rate and failure to reduce public sector spending remain problems. Despite above average agricultural production over the past three years, drought remains a perennial threat to food security and is a critical economic variable. Reduced domestic debt, privatization of the parastatal sector, and streamlining of the civil service must be achieved in order for the private sector to perform its role as an engine of national and regional growth.
Other Donors
The major donors to Zimbabwe are Japan, the European Development Fund, the International Monetary Fund (IMF), the United Kingdom, and Germany. In 1998, the IMF approved a $180 million "standby" loan, then suspended that credit in October 1999 when performance targets were missed. The failure to exercise fiscal restraint is in part tied to Zimbabwe's involvement in conflict in the Democratic Republic of Congo. A World Bank structural adjustment loan is on hold, as are other donors' balance of payments disbursements. While the U.S. is not a lead donor in terms of funding, it has historically been a key donor in HIV/AIDS, low-income housing, family planning and natural resource management. Although macro-level donor coordination is intended to occur through the World Bank Consultative Group mechanism, a Consultative Group meeting has not been held since early 1995. However, the current economic and political crises have mobilized the donor community, which has led to an increased frequency of substantive consultations between donors at both the macro and sector levels. The U.S. Embassy has advocated for increased donor coordination, and has hosted donor discussions and briefings. While foreign assistance accounts for about 15% of Zimbabwe's GDP, the government is neither dependent on bilateral aid nor easily swayed by donor concerns.
Country Background Information Resources CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
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Last Updated on: November 09, 2000 |
