ZIMBABWE

	FY 1998 Actual	FY 1999 Estimate	FY 2000 Request
Development Assistance	$9,900,000	$6,950,000	---
Development Fund for Africa	---	---	$7,000,000
Child Survival and Disease	$1,950,000	$1,550,000	$2,200,000
Economic Support Fund	$55,000	---	---
P.L. 480 Title II	$28,709,000	---	$ 1 ,516,000

Introduction.

The United States has a national interest in supporting Zimbabwe's efforts to contribute to regional economic and political stability. Over the past year, Zimbabwe's performance under its economic reform program has significantly deteriorated. The foundation of the economy remains remarkably resilient, however. Zimbabwe requires targeted U.S. support during this period of economic crisis and political fragility to increase its chances of moving peacefully through the expected political transitions that will culminate in its 2002 presidential elections. In the early 1990s, Zimbabwe made progress toward a market-oriented economy, which could be resumed to encourage greater investment, including that from the American private sector. If the economy grows, beneficial effects include an increasingly viable southern Africa regional market and a growing market for U.S. goods and services. U.S. development assistance enhances Zimbabwe's prospects of regaining its economic stature in the southern Africa region. The United States is Zimbabwe's fourth leading source of imports (after South Africa, the United Kingdom and Japan), and increased trade flows are probable should the economy stabilize. Though Zimbabwe's current military intervention in the Democratic Republic of Congo seems ill-advised, the United States values Zimbabwe's productive participation in regional peacekeeping activities.

U.S. development assistance has focused on helping Zimbabwe realize its economic potential, with a theme of increasing equity and participation of Zimbabweans in their economy. U.S. assistance to Zimbabwe's family planning program has made it one of the most successful programs in Africa (fertility rates have dropped by one-third). The United States has supported a successful program of decentralized natural resources management, in which communities, rather than the central government, make decisions on natural resources on their own behalf. Private sector activities have increased access to low-income home mortgages. Loans to micro-, small and medium-sized enterprises, as well as assistance to key industry leaders in structuring employee ownership schemes, have provided successful models for addressing Zimbabwe's equity issues. As the full extent of the debilitating HIV/AIDS epidemic emerges, the United States remains the lead donor in efforts to reduce HIV transmission. USAID's new activities in democracy and governance will bolster competition between political actors by strengthening civil society organizations and providing support to the government's legislative branch in order to balance the dominant executive branch.

The Development Challenge.

Economic growth has been sidetracked in the past year as Zimbabwe's executive branch took actions that weakened the economy and also revealed an unresponsive political party structure. These regressive steps have undermined expectations of Zimbabwe's ability to graduate from development assistance in 2003. Several crisis points threaten to create more problems before social, political and economic stability return. These crisis points include inequitable land distribution, shortsighted economic management, repressive executive branch legislation forced through a weak parliament, and underlying racial and ethnic tensions. Civil disturbances caused by steep inflation and currency devaluations demonstrate the fragile state of democracy. As a result, USAID has enhanced its pursuit of approaches that will foster a renewed U.S.-Zimbabwe partnership focused on increasing the opportunities of average Zimbabwean citizens to participate in economic and political processes.

USAID support helped Zimbabwe achieve significant progress in key social indicators since 1980. This progress includes increased life expectancy and immunization coverage rates along with decreased fertility and illiteracy rates. Despite this progress, significant problems remain--most turning on issues of equity, such as the unresolved land reform issue. Many of the problems are due, in part, to austerity-related declines in real per capita expenditures on social services. Progress in the health sector has eroded, and HIV/AIDS is overwhelming the impressive gains made in public health over the past two decades. Despite fertility declines, population growth still outpaces weak economic growth. Zimbabwe's external debt of $5.13 billion (1997) is not excessive, but domestic debt is stifling economic growth by bidding up interest rates and crowding out the private sector. Although the investment climate has improved since the 1980s, gains are eroding as a result of such recent policy decisions as fixing the prices of certain commodities and failing to reduce the public sector's dominant role in the economy. In terms of Gross Domestic Product, half the Southern African countries have levels higher than Zimbabwe's $540 per capita. Critical housing shortages have reduced living standards and hindered economic participation for most families. There is a demonstrated need for more equitable and rational use and stewardship of the natural resource base. Drought, a perennial threat to food security, is a critical economic variable. Reduced domestic debt, privatization of the parastatal sector and a streamlining of the civil service are required to encourage the private sector to perform its role as an engine of national and regional growth.

Other Donors.

The leading donors to Zimbabwe are Japan; the European Development Fund; the International Monetary Fund; the United Kingdom; and Germany. The International Monetary Fund suspended its first program in 1995 for noncompliance, but approved a $180 million standby loan in 1998. The loan's second tranche may be released in March 1999. The World Bank is considering a $100-200 million loan to refinance Zimbabwe's domestic debt. While USAID is not a lead donor in terms of overall levels, it has been a key donor in specific sectors, including HIV/AIDS, low-income housing, family planning and natural resource 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. Encouraging progress was made in 1998 in both the frequency and substance of consultation between donors at both the macro and sectoral levels. USAID is using this opportunity to reinvigorate donor coordination. While foreign assistance accounts for about 15% of Zimbabwe's GDP, the government is not aid-dependent or easily swayed by donor concerns.

FY 2000 Program.

Zimbabwe risks succumbing to the growing crises. Structural and institutional weaknesses have limited competition in the political system. The lack of participatory mechanisms for both political and economic decision-making has led to decreased accountability and transparency in government. These weaknesses, compounded by the impact of two devastating droughts in the early 1990s, falling world commodity prices, and a fragile global economy, have set Zimbabwe's economy and development efforts into a downward spiral. As a result, USAID's assumptions when the decision was made in 1995 to phase out the program by 2003 are no longer valid. USAID is developing a new transition strategy in 1999 that will recommend continuing development assistance to Zimbabwe past 2003. The transition strategy will assist Zimbabwean governmental and non-governmental structures to allow Zimbabweans greater participation in economic and political decision making, with a goal of making the government both more responsive and more accountable.

USAID also must bolster support to the health sector, which is incapable of responding adequately to the estimated 2,000 new HIV infections occurring each month. USAID will focus on translating increased public awareness about HIV into changes in sexual behavior that will lead to decreases in the rate of transmission.

ZIMBABWE

FY 2000 PROGRAM SUMMARY (in thousands of dollars)

USAID Mission Director, Rose Marie Depp

USAID Strategic and Special Objectives	Economic Growth & Agriculture	Population & Health	Environment	Democracy	Human Capacity Development	Humanitarian Assistance	TOTALS
S.O. 3. Reduced Fertility and Increased Use of HIV/AIDS Prevention Measures - DFA - CS	--- ---	2,000 2,200	--- ---	--- ---	--- ---	--- ---	2,000 2,200
Sp.O. 1. Increased Opportunities for Citizens' Participation in the Economic and Political Processes - DFA	3,500	---	---	1,500	---	---	5,000
Totals: - DFA - CS	3,500 ---	2,000 2,200	--- ---	1,500 ---	--- ---	--- ---	7,000 2,200

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ACTIVITY DATA SHEET

PROGRAM: ZIMBABWE
TITLE AND NUMBER: Reduced Fertility and Increased Use of HIV/AIDS Prevention Measures, 613-SO03
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $2,000,000 DFA; $2,200,000 CS
INITIAL OBLIGATION: FY 1995 COMPLETION DATE: 2002

Summary: The purpose of this strategic objective is to increase the use of HIV/AIDS prevention measures among Zimbabweans while concurrently increasing the use of contraceptives, including condoms. The beneficiaries are all Zimbabweans who are at risk of contracting HIV/AIDS and other sexually transmitted diseases, as well as those who want to make informed decisions about their future. This is especially important as up to one-third of pregnant women utilizing prenatal services in Harare are HIV positive. HIV/AIDS prevention--through behavior change strategies--is at the core of this objective. However, family planning services will remain a complementary element, as contraceptive counseling and provision play a critically important role in a comprehensive HIV/AIDS strategy.

As the lead donor to Zimbabwe's family planning program, USAID has contributed to the program's significant impact. Between 1984 and 1994, the total fertility rate--the average number of children a Zimbabwean woman will have in her lifetime--declined by a third, from 6.5 to 4.3, and the contraceptive prevalence rate increased by 55%, from 27% to 42% of married women. However, Zimbabwe now must cope with the potentially overwhelming challenge of the HIV/AIDS epidemic coupled with severe economic recession.

USAID is a lead donor in HIV/AIDS prevention program support. Historically, HIV/AIDS programs have focused on peer education intended to motivate behavioral change. This has led to virtually universal awareness of HIV/AIDS, yet Zimbabwe still suffers from one of the highest infection rates in the world. An estimated one in five adult Zimbabweans is HIV positive, and there are no signs yet of a peak in the epidemic. USAID conducted a review of best practices and made a strategic shift in 1998, allocating more resources toward an innovative program that has shown promising results elsewhere on the continent--voluntary HIV counseling and testing (VCT).

Key Results: Four key results are necessary to achieve this objective: (1) increased number of socially marketed condoms sold under the USAID program; (2) increased number of men and women who receive testing and counseling at the six voluntary HIV counseling and testing sites to open in 1999; (3) increased capacity of NGOs to articulate and use strategic and sustainability plans for HIV/AIDS prevention; and (4) decline in the total fertility rate in Zimbabwe.

Performance and Prospects: Due to its crippling budgetary constraints, the Ministry of Health (MOH) finds it increasingly difficult to sustain high quality family planning/reproductive health services. To become more efficient and effective, the MOH must prevent duplication of services while also seizing opportunities to educate women about HIV transmission. USAID will assist the MOH to integrate HIV and sexually transmitted disease prevention into its family planning program. In both 1999 and 2000, USAID will continue to procure contraceptives for Zimbabwe. The Government of Zimbabwe had intended to assume responsibility for this procurement, but cannot because of budgetary constraints. Currency devaluations have increased the cost of contraceptives, all of which must be imported, by more than 100%. USAID plans to provide contraceptives for the next several years, but according to a plan that calls for a progressive drawback on this assistance. This assistance will be contingent upon the Ministry's committing to a plan and identifying other definite sources of contraceptives for the future.

Possible Adjustments to Plans: In the HIV/AIDS area, progress made by the six sites opened in 1999 will determine the number of VCT sites to be opened in 2000. In family planning, the plan to procure contraceptives and provide other technical assistance is subject to the Government's identification of other definite, long-term sources for contraceptives and its agreement to undertake the institutional reforms that will eliminate duplication while integrating HIV/AIDS prevention services with family planning services.

Other Donor Programs: Though USAID has historically been a lead donor in both family planning and HIV/AIDS, it is now phasing out support in family planning/reproductive health, while other donors take a more active role. The European Union and the British Department for International Development both have expressed interest in funding contraceptive commodities. Another donor, the United Nations Fund for Population, has assisted the Government of Zimbabwe to develop a five-year reproductive health strategy. In the area of HIV/AIDS, USAID intends to continue its leadership role in close collaboration with numerous other donors, including but not limited to the World Bank, the United Nations, the Netherlands and the United Kingdom.

Principal Contractors, Grantees, or Agencies: Key U.S. agencies involved in implementation of the program include Population Services International, the Population Council, the Futures Group and PACT, Inc. Zimbabwean and international implementing partners include the Zimbabwe National Family Planning Council, the Ministry of Health, the National AIDS Coordination Program, and the United Nations Children's Fund.

Selected Performance Measures:

	Baseline	FY 2000	Target (2000)
Total number of condoms sold annually through the social marketing program	720,000 (1996)	6,000,000	6,000,000
Number of persons tested and counseled for HIV/AIDS at one of the USAID-funded testing sites	0 (1998)	25,000	25,000
Increase in the number of NGOs articulating and using strategic plans for HIV/AIDS prevention activities	0 (1997)	14	14
Reduction in total fertility rate	4.3 (1994)	4.0	4.0

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ACTIVITY DATA SHEET

PROGRAM: ZIMBABWE
TITLE: Increased Opportunities for Citizens' Participation in Economic and Political Decision-Making, 613-SP01
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $5,000,000 DFA
INITIAL OBLIGATION: FY 1998 COMPLETION DATE: 2003

Summary: Democracy and governance (D/G) issues are central to the achievement of stability in Zimbabwe. Single party domination and excessive executive control have limited competition in the party system, economy and society. Lack of popular participation in both political and economic decision-making has led to decreased accountability and transparency of government. In response to this problem, USAID has developed a special objective whose purpose is "to increase opportunities for citizens' participation in economic and political decision making." The beneficiaries of this strategy include members of a broad range of non-governmental institutions, including civil society organizations, women's groups, human rights organizations, economic, trade and business associations, and development groups who represent citizens' interests. Selected government institutions, including Parliament, also will be beneficiaries.

A lack of political and economic competition has hampered Zimbabwe's development. In order to redress this problem, USAID will encourage democracy on two fronts: first, through development of countervailing forces in society (civil society and private sector) to promote accountability and good governance; and second, enabling Parliament to improve its democratic features and its capacity to provide checks and balances. Support to these two groups will result in increased civil society organizations' representation of citizens' interests and a more effective and accessible Parliament.

Key Results: USAID's D/G Strategy was approved in June 1998; a grant agreement was signed with the Government of Zimbabwe in September 1998. The same month, a cooperative agreement was signed with a U.S. private voluntary organization (PVO) to begin developing a local institution, the Zimbabwe-American Development Foundation. Start-up activities with civil society and Parliament were completed in 1998 and full implementation of these activities will begin in early 1999. USAID is currently finalizing its performance monitoring and evaluation plan, which will include results indicators and targets through the planning period.

Performance and Prospects: The political and economic indicators in Zimbabwe have continued to decline in recent years. Inflation has increased to 45%, while the currency has devalued by over half in the past year. It has become increasingly difficult for the average person to make ends meet. Frustration levels have reached new heights, demonstrated by employee strikes led by a well-organized trade union movement. Prospects for success in D/G work are high for several reasons, however: (1) The populace is receptive to interventions designed to give them a greater voice in economic and political decision-making; (2) Members of Parliament have begun to question the executive branch and to be more assertive in expressing the concerns of the constituency that elected them; (3) There is consensus among both government officials and the donor community on a plan to advance land reform and resettlement; and (4) Civil society organizations, though resource-strapped, are becoming important vehicles for the expression of Zimbabweans' growing economic and political concerns.

Possible Adjustments to Plans: In response to the deteriorating economic and political situation, USAID is preparing a new transitional country strategy. To lay the groundwork for that strategy, USAID already has responded to one of the most pressing problems for Zimbabwe's economic development and political and social stability: land policy reform. Technical assistance from Zimbabwean and American specialists will be provided to facilitate, inform and guide the critical planning and initial implementation phases of the policy reform. In the wake of increasing economic hardships, there is an urgent need to tackle the distorted and inequitable land distribution system in a way that will ensure a fair and transparent allocation of the nation's most significant economic asset. If this is not properly implemented, increased frustrations could lead to a crisis. For its Parliamentary assistance program, USAID believes that in-country technical assistance will achieve results quickly and effectively; a cooperative agreement with a U.S. PVO is planned for 1999.

Other Donor Programs: Donors involved in complementary D/G activities include the United Kingdom, Norway, Sweden, Denmark, Canada, Australia, the European Union and the United Nations Development Program (UNDP). Emphasis on host government counterparts will mostly be through Parliament, which has completed a comprehensive Parliamentary Reform Report and has requested assistance for its implementation. Most major donors in Zimbabwe, including the World Bank and UNDP, will provide some level of assistance with land reform. Norway, Sweden and the Netherlands, together with the United States, are the key donors providing technical assistance to land policy activities. Government of Zimbabwe decision-makers and technical counterparts, along with farmers' unions and other non-governmental actors, will work closely with donors on the land policy reform activities. USAID will coordinate closely with these donors to ensure its program does not duplicate other donors' efforts.

Principal Contractors, Grantees or Agencies: Key implementing partners include local PVOs as well as U.S. PVOs such as PACT, Inc., the International Republican Institute and/or the National Democratic Institute, and the University of Wisconsin's Land Tenure Center.

Selected Performance Measures: The draft baseline data and specific results will form part of the final design for the Special Objective, to be completed in the first quarter of calendar year 1999. These indicators could include:

Increased civil society organization (CSO) perceptions of valid engagement with Parliament on issues relevant to their area of concern

Increased Member of Parliament assessment of the quality of CSO input into legislative process

Increased number of Parliamentary Committee meetings and other public hearings in which CSOs actively participate

An effective, transparent and efficient national land policy framework and redistribution strategy

Alternative land models tested and monitored

Improved socio-political stability through more equitable access to and ownership of land and socio-economic infrastructure

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