TA decade-long mismanagement left Zimbabwe’s institutions in a fragile state at the end of 2008. Public services were in a state of collapse, cholera was spreading, and infrastructure was in a state of disrepair. Two years of hyperinflation during which real wages declined to about $2-3 per month had led to an exodus of skilled technical staff from the public sector. The Bank started advising the new government in March 2009 but it could not lend any money because Zimbabwe was, and continues to be, in arrears to the Bank. The main instrument available to the Bank for supporting the government is analytical and advisory activities.
In August 2009, the Ministry of Finance (MoF), Government of Zimbabwe, made a request for technical support to their 2010 Budget preparation; the problem faced by the Ministry was how to prioritize capital expenditure given that the demand for resources far exceeded availability. Infrastructure Ministries had submitted proposals running into several billions of dollars while the financing was not likely to exceed a few hundred million dollars. There was also a concern that the projects submitted for financing may not have gone through adequate technical scrutiny. The MoF found itself in this difficult situation because of the erosion of technical capacity both in the MoF as well as line ministries dealing with infrastructure, during a decade of economic mismanagement which left government capacity considerably weakened.
A multi-sectoral team was constituted to work with the Government and was comprised of experts from the roads, energy, water, and telecommunications sectors. They had extensive consultations with line ministries, infrastructure parastatals, and the MoF. The team members effectively acted as honest brokers between the MoF and line ministries. The final output of the team was a report with a list of priority investments in power, transport, telecommunications, and water sectors within an anticipated medium-term resource envelope. It also laid down priority policy and institutional actions in these sectors.
The activity had the following impact:
- It demonstrated to the MoF and line ministries that emergency rehabilitation of infrastructure was the top most priority for the recovery of growth. The prioritization scheme developed by the Bank team was adopted by the government in its 2010 budget.
- The MoF used the list of identified projects for seeking donor aid to the budget. Finally the MoF laid out a capital outlay of about $100 million using its own resources, while drawing upon the list of priority investments in the report.
- Following the recommendation made by the study, the government is financing a telecoms project (fiber-optic link to provide access to a cable under the sea) that has the potential to transform telecom services in Zimbabwe.
- Donors have used the results of the study to identify priority investments to be financed out of Programmatic MDTF
- The activity provided a jump-start to Bank’s policy re-engagement with the government in the supported sectors. Water and roads teams have had follow-up missions.
The total cost of the AAA activity was US $ 300,000.
The activity was financed both from the Bank Budget as well as the Analytical-MDTF that includes contribution from several bilateral donors such as DFID, EC, and USAID
Toward the Future
The mission has been followed up by visits and support from individual teams such as in water and transport. These teams are now helping the government implement the recommendations that were developed by the multi-sectoral mission. The water team is preparing studies identified during the mission and the transport team is developing technical assistance to help implement the rehabilitation program in roads. The Bank is also following up with technical assistance towards investment planning and management and in March 2011 a GET mission visited Harare to initiate support.