Tunis, Tunisia — The strategy, which covers the next 19 months to December 2010, is anchored on support to the Inclusive Government (IG) formed in February 2009 on the basis of a Global Political Agreement (GPA) between the parties, and on the implementation of its Short-Term Emergency Recovery Programme (STERP). STERP emphasizes political stability, good governance, social protection, sound macro-economic management and growth. It has eliminated the quasi-fiscal activities of the Reserve Bank of Zimbabwe and introduced cash budgeting, spending only what it receives in revenue.
The objectives of the AfDB strategy are to contribute to improved economic stability, better financial and economic management and accountability, greater private sector and international confidence, as well as the development of key areas such as the rehabilitation of infrastructure and capacity building. The longer-term goal is the revival of strong private sector-led growth, building on Zimbabwe's resource endowments.
A recent IMF Article 4 mission says an economic recovery will not be possible in Zimbabwe without foreign assistance and private capital. Therefore immediate steps have to be taken to stimulate private sector activity, promote investor confidence, restore protection of property rights, and reduce the cost of doing business.
The Bank will help kick-start financial sector operations, identify specific sectors, especially those covering physical infrastructure development where the Bank can leverage its resources with those of other donors, assist the IG with policy development and implementation, and interface with the international community. The AfDB intends to also provide a quick disbursing and self-liquidating line of credit to the private sector.
The paper takes account of meetings last month between Zimbabwe's Finance Minister, Tendai Biti and key donors hosted by the AfDB in Tunis, and the Norwegian Government in Washington, D.C. Donors have made it clear that while they have seen some recent progress in Zimbabwe, most will provide only humanitarian support until there has been further progress. That would include progress on areas of governance, in keeping with the commitments the IG has established in the GPA.
Nonetheless, there has been broad support for International Financial Institutions to engage with the IG, and for them to provide technical assistance now. Zimbabwe is in arrears with the IFIs, and shareholders have called on IFIs to produce a coordinated plan of action to clear the arrears. It is agreed that the AfDB should play a role beyond that of simply financing. The strategy therefore situates the AfDB contribution firmly within the context of a broader regional and international effort.
The directors welcomed the establishment of an AfDB team in Harare to work closely with the IG and the international community. The strategy puts emphasis on speed and flexibility, and highlights the potential for AfDB's Fragile State Facility to provide a channel for additional resources. For the AfDB itself, one outcome will be the development of a full Bank Country Strategy Paper based on a medium-term strategy developed by the government and the resumption of normal lending operations.
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Felix Njoku
