World Bank funds bypassing Zimbabwe government

World Bank Vice President for Africa, Obiageli Ezekwesili, told Reuters some $22 million in grants from the Bank were being spent on behalf of donors through international agencies, aid and church groups to help small farmers and the poor.

Media reports this week said the World Bank would make its first grant available to the Zimbabwe government since 2001, signalling the institution was re-engaging with the bankrupt southern African country.

Ezekwesili denied the reports, saying the World Bank was not lending to Zimbabwe’s government.

"It’s not money going directly through the government of Zimbabwe," Ezekwesili said in an interview. "We don’t have the basis for such an engagement yet."

"The policy of international financial institutions is that there first has to be a re-engagement," she added.

Such a step would require the new unity government of President Robert Mugabe and Prime Minister Morgan Tsvangirai to develop a credible programme to rebuild the country’s economy and implement reforms.

"Key is the whole area of public financial management, of how the public sector operates and dealing with governance issues, which is going to be very critical," said Ezekwesili. 

Also important to normalising relations with donors and securing financing is for Zimbabwe to clear its arrears with the World Bank, the International Monetary Fund and African Development Bank.

As of April 2009, Zimbabwe was $673 million in arrears to the World Bank, $140 million to the IMF and $430 million to the African Development Bank.

The formation in February of the unity government between Mugabe and his long-time foe Tsvangirai has generated a cautious optimism towards Zimbabwe, once one of Africa’s most prosperous economies.

But wrangling between the political rivals has continued, with sharp differences over issues such as the posts of central bank governor and attorney general.

Central Bank Governor Gideon Gono, a close Mugabe ally, has been under pressure to resign from Tsvangirai’s Movement for Democratic Change, which accuses him of helping to bankrupt the country and implementing policies that have caused hyperinflation and accelerated the country’s economic decline.

The new government has indicated it needs about $8.5 billion in emergency aid over the next two to three years to revive the economy.

Donors have said they are unwilling to resume aid and lift sanctions while Gono remains head of the central bank and until the government reverses its nationalization policies and halts human rights abuses.

Ezekwesili said the formation of the unity government was a major step forward for Zimbabwe but it now has to demonstrate it is serious about fixing the economy by adhering to a programme that addresses economic shortcomings and implements institutional reforms.

"People are going to be looking at how quickly Zimbabwe returns to the rules of the game in basic transparency of the decision-making process," she said. "Most of the work is going to happen at the level of the Zimbabwe leadership."  

She said the World Bank is currently conducting an assessment of the economy and areas that are important to Zimbabwe’s recovery including agriculture, mining and energy.

"The key thing is that the government of Zimbabwe has a credible medium-term economic programme in place and demonstrates performance over a period of time around it," she added. "That also involves building a consensus around a programme which has the support of everyone."