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| >> AFR Regional Overview >> Zimbabwe Overview | |||||||||
IntroductionZimbabwe is a country of immense human and natural potential. For much of its twenty years of independence, it has been second only to South Africa as the most highly developed country in the Southern Africa region. As a country that struggled successfully against white minority rule, Zimbabwe was a beacon of hope for the region and the world. Until recently, Zimbabwe was seen as a model in the region with a peaceful law-abiding populace who worked hard to develop its resources despite warring neighbors. Zimbabwe is currently facing a number of problems, including the transition from a 20-year one-party state to a multiparty democracy. There is no indication that the problems will be solved in the near term. Economic growth is stalled due to the government deficit, high inflation and high interest rates. Economic reforms are off-track and International Monetary Fund and World Bank programs are on hold. Sixty percent of the population lives below the poverty line, unemployment is about 70 percent, and inflation is currently at 63 percent. Numerous private sector companies have gone bankrupt, public health and education systems are collapsing, democracy is under attack, and Zimbabwe has one of the highest HIV/AIDS infection rates in Africa. All of this is exacerbated by continued government spending on military action in the Democratic Republic of Congo. However, a dynamic political transition is occurring with the emergence of a credible opposition party during the 2000 parliamentary elections. The opposition has offered an alternative candidate in the 2002 presidential elections and has introduced a competitive voice in national affairs. USAID is using Development Assistance, Economic Support Funds and Office of Transition Initiatives (OTI) resources in Zimbabwe in targeted ways to support a peaceful democratic transition and help preserve the foundation that will allow an economic recovery. If a credible political transition occurs, there is optimism that the economy can recover quickly and that Zimbabwe can once again be a vital player in an increasingly viable Southern Africa regional market and a growing market for U.S. goods and services. The United States is the fifth leading source of imports for Zimbabwe (after South Africa, the United Kingdom, China and Germany). In addition, historically the United States has valued Zimbabwe's participation in regional peacekeeping efforts in Somalia and Angola. USAID's assistance strategy focuses on aiding Zimbabwe during its current transition so that its economic and regional leadership potential can be realized. USAID, with active Embassy support and involvement, is implementing a program to mitigate the current social, economic and political crises. The United States is helping civil society strengthen its participation in economic and political decision-making. Simultaneously, USAID supports Zimbabwe's parliamentary reform by strengthening its committee system to enable parliamentarians to better represent their constituents. With one in four adults infected by HIV, the debilitating AIDS epidemic is the greatest development challenge for the nation. The United States remains the leading bilateral donor in efforts to reduce HIV transmission and is implementing a nationwide voluntary counseling and testing program for HIV/AIDS. An expanded micro-enterprise program will help create an economic "safety net" for the increasing numbers of people being forced into the informal sector. In the current debilitating economic environment, the informal sector remains the best option for providing a livelihood for the poor majority. The Development ChallengeOver the past three years, economic growth has been negative. More recently, external debt has been mounting, and domestic debt--which requires nearly fifty cents on every dollar in government revenue for debt servicing--is stifling economic growth by bidding up interest rates and crowding out the private sector. For the first time, Zimbabwe has defaulted on its international debt and is in "non-accrual status" with the World Bank. The investment climate, centralized policy decisions, including price controls on certain commodities, a fixed exchange rate and failure to reduce public sector spending remain serious 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. Land invasions, unusual rainfall patterns, and an inability of the government to purchase grain from rural farmers due to financial constraints may result in potentially serious food shortages in 2001 and 2002. Reduced domestic debt, privatization of government-owned businesses, and streamlining of the civil service must be achieved in order for the private sector to perform its role as an engine in national and regional growth. It is unlikely that these key reforms will be accomplished in the coming year in which a presidential election is on the horizon. Post-independence assistance 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, Zimbabwe has unresolved land ownership and distribution problems that remain the linchpin of economic and social justice. Throughout the 1990s, USAID addressed issues of equity through its private sector and low-income housing programs. Because of the current HIV/AIDS crisis, government mismanagement of the economy resulting in declining financial resources and spiraling inflation, and the flight of health care professionals, achievements in the health sector are being significantly eroded. This has undercut the public health gains made since independence. Despite fertility declines and an estimated 2,000 weekly deaths due to AIDS, the current economic crisis requires that the provision of a modest quantity of modern contraceptive products remain part of the U.S. assistance program. Other DonorsOther than the United States, the major donors to Zimbabwe are Japan, the European Development Fund, the United Kingdom, and Germany. In 1998, the International Monetary Fund 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 the conflict in the Democratic Republic of Congo. IMF and World Bank structural adjustment assistance is on hold, as are other donors' balance of payments disbursements, while awaiting Government of Zimbabwe actions on land invasions. Donors are united in not providing assistance to Zimbabwe until there is a workable land reform strategy that is based on the rule of law. In the meantime, most donors have suspended government-to-government programs and the support that does continue - including virtually all U.S. support - is channeled through non-governmental entities. While the U.S. is not a lead donor in terms of funding, it has historically been a key donor in HIV/AIDS prevention, low-income housing, family planning and natural resources 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 and led to an increased frequency of substantive consultations among donors at both the macro and sectoral levels. While foreign assistance accounts for about 15% of Zimbabwe's Gross Domestic Product, the government is not easily swayed by donor concerns. FY 2002 ProgramZimbabwe remains a country at risk. The USAID crisis prevention/mitigation strategy is an appropriate use of U.S. resources in this important country in the Africa region. The strategy has three major components. The cornerstone of the strategy is a democracy program that enhances citizens' participation in economic and political decision making by creating opportunities for dialogue between civil society and government. The goal is to make the government both more responsive and more accountable to its citizenry. The democracy program includes modest technical assistance resources for land policy research and training to help guide the land reform process in a more constructive direction. A new pilot program to work in four local government areas began in 2001. The program will strengthen local authorities and civil society at the local level in order to enhance the dialogue between the two. The bulk of U.S. funding is provided to non-governmental entities. In FY 2002, USAID will significantly expand essential support to the health sector, which currently is unable to adequately respond to the HIV/AIDS crisis. USAID focuses on translating increased public awareness about HIV into changes in sexual behavior that will lead to decreases in the rate of transmission. USAID designed a new community-based initiative that began in FY 2001 to help cope with the nearly 700,000 children orphaned by AIDS which will continue in FY 2002. Also in 2001, USAID received preliminary feedback on the effectiveness of the voluntary counseling and testing effort launched in FY 2000 to encourage behavior change. Additionally, a program to support disadvantaged groups through micro-enterprise development, credit, and skills training commenced in early FY 2001 and will continue in FY 2002. This program is linked directly to the HIV/AIDS and orphans program. USAID's Office of Transition Initiatives will continue to provide targeted complementary support to key elements of the new crisis mitigation strategy, in particular, support to constitutional reform, election support and assistance to the independent media. Activity Data Sheets
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