The World Bank is providing humanitarian assistance through NGOs, church groups and aid agencies
There is a process for re-engagement that includes arrears clearance and agreement on a credible economic program
WASHINGTON, May 22, 2009 – The right conditions have not yet been created for the World Bank to re-engage on a full-fledged economic development program with Zimbabwe and humanitarian assistance currently provided to help the poor in that country is being channeled through NGOs and aid agencies.
World Bank Vice President for the Africa Region Obiageli Ezekwesili told journalists Tuesday that although the Bank still does not do business with Harare, it is working through NGOs and aid agencies to mitigate the impact of a drastically declined economy on the poorest Zimbabweans.
Ms. Ezekwesili explained that the Bank has provided grant funding through the United Nations Food and Agricultural Organization (FAO) to ensure that small holder farmers, who are already badly-hit by the global food crisis and Zimbabwe’s crumbling agricultural and wider economy, can get seeds, fertilizers and other inputs.
The World Bank is also providing resources to NGOs and civil society organizations to combat HIV/AIDS and other pandemics and is preparing a grant to work with the United Kingdoms Department for International Development (DfID) on social safety nets to protect the poor.
Ms. Ezekwesili explained that safety net programs are desperately needed to help mitigate the devastating consequences of Zimbabwe’s economic collapse on the poor. The country’s economy shrunk 50 percent over the last eight years, and by as much as 14 percent in the last year alone.
In addition, the Bank is funding a needs assessment in anticipation of future work that would have to be done, once the right conditions are in place, in key areas to help jump-start an economic revival – agriculture, mining, tourism, energy, public finance management, etc.
The total amount of grant funding involved with these initiatives is smaller than the $22 million mentioned by media outlets earlier this week, in reports that also suggested the World Bank was re-engaging with Zimbabwe.
“Those reports are not an accurate interpretation of what we are presently doing with Zimbabwe,” Ms. Ezekwesili said.
Re-engagement (a resumption of lending) with the unity government of President Robert Mugabe and Prime Minister Morgan Tsvangirai must be preceded by the government developing a credible economic development program, building consensus and support nationally for the program, demonstrating sustained progress in implementing reforms and clearing debt arrears to international financial institutions, Ms. Ezekwesili said.
As of April 2009, Zimbabwe owed an estimated US$1.24 billion in debt arrears: US$673 million to the World Bank, US$430 million to the African Development Bank and US$140 million to the International Monetary Fund.
The World Bank Vice President, who met last April in Washington with Zimbabwe’s finance minister, acknowledged that the short-term program of the unity government (lasting until December 2009) points in the right directions. She, however, stressed that Harare is still a long way from building the massive confidence that is needed among development partners for funding to be provided through government channels for long-term programs.
“These are still early days for Zimbabwe, but we at the World Bank are interested in seeing the government move quickly in building the ambience and conditions that would help development partners to re-engage,” Ms. Ezekwesili said, explaining that it is critical for the Zimbabwean government to demonstrate that it can manage the economy with prudence and transparency by pursuing some key economic reforms.
Zimbabwe’s unity government has said it would take some $8.5 billion in emergency aid to revive the country’s economy over the next two-to-three years.
The World Bank and other donors, Ms. Ezekwesili explained, stand ready to work with Zimbabwe on arrears clearance consistent with practice within international financial institutions (IFIs). Liberia, Cote d’Ivoire and Togo are among the African countries that benefited most recently from IFI support to clear debt arrears.
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