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FY 1997 Development Fund for Africa: $24,652,372
Introduction.
Despite Zimbabwe's relatively low gross domestic product (GDP) per capita ($520 in 1994), the country has enormous potential. It possesses an educated workforce, a highly diversified economy, and an abundant natural resource base. This potential enhanced considerably in recent years through implementation of an International Monetary Fund-backed economic structural adjustment program that, though not without problems, has put the country on the path toward private sector-led growth. For example, the foreign exchange regime has now been completely unified (the value of the national currency is determined by market forces), and foreign investors are free to remit 100% of earnings outside of the country. In the rural sector the maize market has been completely liberalized, resulting in greater availability of foodstuffs at cheaper prices. Elimination of the subsidies has greatly reduced pressure on the national budget. These reforms have substantially increased Zimbabwe's prospects for growth and its attractiveness as a target for foreign direct investment, including American investment. In this regard, U.S. exports to Zimbabwe grew at an average annual rate of over 8% between 1985-1994, four times the overall average for sub-Saharan Africa. Assuming that Zimbabwe continues to stay the course of economic reform in the years to come, the country will likely graduate from the ranks of "developing nations" sometime in the first decade of the 21st century. The U.S. Government has a keen interest in assuring that this occurs. U.S. assistance will ensure that free market reforms continue to build ties between Zimbabwean enterprises and foreign investors, including those in the American private sector. Thus, assisting in the development of markets for U.S. goods and services is in the national interest of the United States. As Zimbabwe's economy grows, the beneficial secondary effects will include an increasingly vibrant trading partner in southern Africa that already contributes substantially to regional stability through its economic viability and its important contributions to regional peacekeeping.
The Development Challenge.
Zimbabwe's development indicators compare favorably with those of its neighbors in sub-Saharan Africa. The total fertility rate--the number of children the average Zimbabwean woman will bear during her lifetime--is presently 4.3 compared to the regional average of 6.1. Life expectancy at birth is 60 years compared to a regional average of 52, though this has actually declined slightly from 62 years in 1987. Immunization coverage rates are also relatively high: the percentage of children aged 0-1 inoculated against tuberculosis, DPT (diphtheria, pertussis, and tetanus), polio, and measles is 95, 80, 80, and 74, respectively, compared with regional averages of 63, 50, 50, and 51, respectively. Finally, illiteracy, at 33% of the population (26% for males and 40% for females), is considerably lower than the regional average of 51% (39% for males and 62% for females).
However, a number of very significant development problems remain. Many are due at least in part to austerity-related declines in real per capita expenditure in the public health budget. Infant and child mortality rates, though greatly reduced from pre-independence levels, have stagnated since 1988, and the maternal mortality rate remains high at 283 deaths per 100,000 live births. In addition, immunization coverage rates have fallen significantly. The country's investment climate, while greatly improved from past years, needs to be stimulated further through broadened participation and a reduced public sector role. Housing shortages remain acute, reducing living standards and dampening economic opportunity for low-income families. The HIV/AIDS pandemic--a serious public health menace in Zimbabwe--must also be slowed and ultimately stopped. And better care must be taken to ensure more rational use and stewardship of the natural resource base. Above all, the government's fiscal house must be put in order so that the private sector can perform its role effectively as an engine of national and regional growth.
Among low income countries, Zimbabwe is considered "moderately indebted." At independence the country's external debt was equivalent to 16% of GDP, a figure that subsequently rose to over 50%, mostly from non-concessional commercial sources. There has since been a substantial reduction in commercial bank exposure. The government's domestic borrowing, however, has driven up interest rates in recent years and sharply reduced the amount of national savings available for investment by the private sector. In 1995 public debt stood at roughly 90% of GDP, about one-third higher than in 1994.
Other Donors.
With an annual operating budget of about $20 million, USAID is currently the fourth largest provider of bilateral grant assistance to Zimbabwe after Japan, Germany, and Sweden. At the macro level, coordination is assured through the World Bank Consultative Group mechanism. Additional working-level bodies exist to ensure sectoral coordination in such areas as health and family planning, private sector development, low-income shelter, and natural resources management.
FY 1997 Program.
USAID's strategy for helping Zimbabwe achieve sustained growth focuses on broadened ownership and investment at all levels of the economy, increased household food security for the rural poor, reduced fertility, and increased use of HIV/AIDS prevention methods. This strategy supports overall U.S. interest in developing future markets for U.S. goods and services and encouraging the Government of Zimbabwe (GOZ) to continue the excellent leadership role it has played in recent years in regional peacekeeping operations such as in Angola and Liberia. The strategy supports structural adjustment, increased economic growth that is sustainable and equitable, and the fostering of an open economy conducive to investment.
USAID/Zimbabwe is one of the Bureau for Africa Missions that has recently been named to graduate from USG development assistance in FY 2003. Consultations between the State Department and USAID are being finalized at the writing of this Congressional Presentation. As well, preliminary discussion on the strategic framework for the final Graduation Strategy is taking place at both the field and central levels. Because final operating expense budgets remain unclear for FY 97 and beyond, it is possible that program budgets will alter to some extent in coming months. To respond to the downsizing exercise, the Mission is proposing a strategy that follows the narrative and program summary contained herein but would require some flexibility. In addition to adjustments in each of USAID/Zimbabwe's strategic objectives, the Mission is pursuing the possibility of a Foundation or Endowment instrument that would permit USAID-sponored activities in Zimbabwe at the termination of direct USAID development assistance.
Three strategic objectives contribute both to the Mission's overall objectives and to over-arching Agency goals as follows:
Agency Goal: Protecting the Environment
USAID/Zimbabwe's first strategic objective--increased household food security in communal areas of natural regions IV and V--has largely been achieved through the near-total liberalization of the maize market and the dissemination of improved varieties of millet and sorghum--two crops better suited to the more arid climatic conditions in these more environmentally fragile regions. The dismantling of government controls has had the effect of lower prices and greater availability of the country's staple grain for the average Zimbabwean consumer. In addition, an entire new industry comprising 15,000-20,000 micro-millers (grain processors) has emerged, and the need for government subsidies (totaling over $40.0 million per year) has been eliminated. Under the Regional Sorghum and Millet Improvement Program, the number of hectares planted to improved varieties of these two drought-resistant crops has gone from zero in 1988 to 69,000 in 1995, bringing additional food security to rural households.
The remaining key aspect of this strategic objective is the provision of support for the natural resources management program known as CAMPFIRE--Communal Areas Management Program for Indigenous Resources. Based upon the success of a pilot activity, this program has now been extended throughout the drought-prone areas known as Natural Regions IV and V, where the majority of Zimbabwe's rural poor resides. The program provides a dual benefit by (1) channelling funds that would otherwise go into central government coffers into local communities and households via grassroots-level wildlife management activities (increasing food security at the household level by increasing household incomes), and (2) improving the actual quality of that management. Since 1989 the CAMPFIRE program has drastically reduced the number of poaching incidents and nearly $5.0 million has been raised by local communities (for individual household- and community-level use) from sustainable wildlife management activities.
With the successes of programs aimed at maize market liberalization and the dissemination of improved millet and sorghum varieties, USAID/Zimbabwe is now undertaking, in collaboration with its non-governmental organization (NGO) and Zimbabwean Government partners, an in-depth review of this strategic objective. Initial indications are that the revised objective will give relatively greater emphasis to sustainable natural resource management, the conservation of biological diversity, and, through local-level activities with CAMPFIRE communities, accelerated decentralization and empowerment of local populations.
Agency Goal: Encouraging Broad-based Economic Growth
USAID/Zimbabwe's second strategic objective--broadened ownership and investment at all levels of Zimbabwe's economy--acknowledges that access to economic resources and economic empowerment has been disproportionately vested in the minority population (of European descent) and government itself. By broadening access to economic assets, opportunities for increased competition and improved efficiency are created. USAID assistance has three components: increased access to low-income shelter and its attendant economic benefits; support to the private sector through support for employee ownership schemes, business/trade association support, and mechanisms to increase access to capital for small and medium-size enterprises; and promotion of local private sector training organizations.
Success has been most evident to date in the area of low-income shelter, where USAID has been involved in promoting American-style housing development and mortgage lending techniques. In FY 1995 over 7,000 low-income households in seven towns received mortgages for houses. Several thousand more units are presently under construction. Since 1992 the number of low-income Zimbabweans than can afford a house--that critical first step toward increased family welfare and economic participation--has tripled as a direct result of reforms negotiated through the USAID program. In this process, an American firm--GS Holdings (California)--has introduced new (for Zimbabwe) construction techniques that both reduce the overall cost of housing to the customer and reduce the amount of time required for construction. To reduce the costs of imported materials further, GS Holdings has invested in a small steel framing factory in Zimbabwe and plans to go into interior wallboard production locally as well.
Agency Goal: Stabilizing World Population Growth and Protecting Human Health
USAID/Zimbabwe's third strategic objective--reduced fertility and increased use of HIV/AIDS prevention measures--is aimed at reducing two key threats to sustainable development in Zimbabwe, rapid population growth and the spread of HIV/AIDS. In family planning, due in large measure to USAIDassistance, Zimbabwe now has the lowest recorded total fertility rate (TFR) in sub-Saharan Africa. Between 1984 and 1994, the TFR--the theoretical measure of the average number of children the average woman will have in her lifetime--fell from 6.5 to 4.3, a full 33% drop. During the same period the use of contraceptives increased by 55%. About 42% of married women now use modern contraceptives versus just 27% in 1984. USAID's present strategy is to promote contraceptive diversity and, in particular, the use of longer-acting contraceptive methods. USAID provides most of the oral contraceptives currently used in Zimbabwe, particularly two pill brands (Lo Femenal and Ovrette) manufactured by Wyeth, an American company. The Government of Zimbabwe plans to assume responsibility for the procurement of pills by the end of the program and hopes to continue to buy Wyeth products thereafter.
The HIV/AIDS pandemic continues to worsen in Zimbabwe. Although 50,000 AIDS cases have been reported, a conservative estimate is that over 10% of the population of about 11 million people are HIV positive, and that 150,000 of these cases are clinically pronounced. There are approximately 4,500 deaths a year, or 375 a month. In a recent unpublished survey of urban pre-natal clinics fully 40% of the 2,500-3,000 women clients sampled were HIV positive. Tuberculosis cases resulting from HIV exceeded 23,000 in 1994 and are rising by about 30% per year according to Ministry of Health sources. USAID interventions are focused on supporting changes in high risk behavior in selected occupational groups, including those in the uniformed services, commercial farmers and their employees and families, university students, and factory and transportation workers. USAID supports Government of Zimbabwe agencies, the National AIDS Coordination Program, private sector institutions, appropriate local businesses, United Nations Children's Fund, and non-governmental organizations to strengthen HIV-prevention activities in key populations at high risk of sexually-transmitted HIV infection.
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Encouraging Broad-based Economic Growth |
Stabilizing World Population Growth & Protecting Human Health |
Protecting the Environment |
Building |
Providing Humanitarian Assistance |
TOTALS |
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USAID Strategic Objectives |
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1. Increased Household Food Security in Communal Areas of Natural Regions IV and V -Dev. Fund for Africa |
|
6,108,422 |
1,111,488 |
7,219,910 |
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2. Broaden Ownership and Investment at all Levels of Zimbabwe Economy - Dev. Fund for Africa |
8,876,971 |
|
8,876,971 |
|||
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3. Reduced Fertility and Increased Use of HIV/AIDS Prevention Measures - Dev. Fund for Africa |
|
8,555,491 |
|
8,555,491 |
||
|
Totals - Dev. Fund for Africa - Int'l Narcotics Control - P.L. 480 Title II |
8,876,971 |
8,555,491 |
6,108,422 |
1,111,488 |
|
24,652,372 |
USAID Mission Director: Peter Benedict
PROGRAM: ZIMBABWE
TITLE AND NUMBER: Increased Household Food Security in Communal Areas of Natural Regions IV and V, 613-S001
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1997: $7,219,910 DFA
INITIAL OBLIGATION: FY 1996; COMPLETION DATE: FY 1999
Purpose: To develop sustainable income streams for rural households, avoid social and economic upheaval stemming from drought, and expand the private sector's role in the production and marketing of principal food grains in the rural sector; to spread adoption of more drought-tolerant millet and sorghum varieties (as an alternative to the more traditional maize); and to increase non-farm income possibilities in the rural sector, particularly in those areas where annual income is significantly below the national average.
Background: This SO seeks to ensure that the rural poor are active participants in the national development process. The highest priority in this regard is ensuring that people living in the least well-endowed, semi-arid regions have adequate access to food and both farm and non-farm income.
USAID Role and Achievements to Date: USAID has been the principal donor supporting the Government of Zimbabwe's (GOZ) liberalization of the grain marketing sector. Reforms carried out under the Grain Marketing Reform Program have resulted in the near-total liberalization of the maize market in Zimbabwe, yielding greater availability of grain at reduced cost, employment creation through emergence of some 15,000-20,000 micro-millers (grain processors), and elimination of the need for massive annual government subsidies totaling over $40 million to the maize marketing system. The Regional Sorghum and Millet Research Program has seen the number of hectares planted to improved varieties of sorghum and millet grow from zero in 1988 to over 69,000 in 1995. Since the inception of the indigenous, sustainable management of the natural resources-based Communal Areas Management Program for Indigenous Resources (CAMPFIRE) program in 1989, the number of participating households has expanded nearly eleven-fold, from 9,000 to about 103,000. Moreover, even though average household revenues earned by program participants has remained fairly stable over time, the program's overall revenues increased dramatically. Revenues in 1995 were $2.7 million.
Description: Principal activities supporting this strategic objective include the Grain Marketing Reform Program, Grain Marketing Research, the multi-donor Regional Sorghum and Millet Improvement project, and the Natural Resources Management project.
Host Country and Other Donors: Countries and development organizations carrying out complementary activities include the World Bank, Holland, Canada, Germany, the European Union, Sweden, Norway, Great Britain, Denmark, and the Ford and Rockefeller Foundations. USAID is the largest donor in the CAMPFIRE program. Donor coordination is excellent; USAID contacts with other donors are strong.
Beneficiaries: Rural families and communities, farmers, and grain traders in Natural Regions IV and V; small-scale millers and maize consumers throughout the country.
Principal Contractors, Grantees, or Agencies: Contractors: Development Associates, Price Waterhouse, Coopers and Lybrand and Purdue University. Grantees: GOZ and International Crop Research Institute for the Semi-Arid Tropics. Agencies: Grain Marketing Board, Small Scale Millers Association, Zimbabwe Farmers Union, Southern African Development Community, CAMPFIRE Association, and World Wildlife Federation.
Major Results Indicators:
Baseline Target
Average Household Food Availability 884 kg/household (1993) 1,100 kg/household (1996)
Maize prices (inflation adjusted) $2.00 (1989) $1.68 (1996)
Proportion of maize moving through 20% (1993) 60% (1996)
private rather than public channels
Average household benefit derived $6.00 (1989) $10.00 (1996)
from CAMPFIRE program participation 7,861 households (1993) 105,000 households (1996)
PROGRAM: ZIMBABWE
TITLE AND NUMBER: Broadened Ownership and Investment at All Levels of Zimbabwe's Economy,
613-S002
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1997: $8,876,971 DFA
INITIAL OBLIGATION: FY 1996; COMPLETION DATE: FY 2001
Background: Zimbabwe has a decidedly dual economy, with large proportions of the country's real and financial wealth vested in the hands of a minority of the population. It is generally believed that broad-based economic growth is retarded by this imbalance. USAID seeks to expand private business opportunities and ownership of economic assets among the majority of Zimbabweans. One of the principal avenues for reaching this objective is helping low-income Zimbabweans become homeowners, a critical first step to economic participation and independence. Other avenues include employee ownership schemes, small and medium enterprise (SME) development, training programs, and activities aimed at increasing access to debt and equity capital, expanding microenterprise credit, and improving national economic policies.
USAID Role and Achievements to Date: USAID has overseen the successful emergence of a viable market in SME training services and the promotion of new SMEs through franchising and subcontracting. As a result of USAID/Zimbabwe's loan guarantee program, more than 40 small business loans averaging about $4,800 each have been made since the beginning of FY 1996. On the low-income shelter side, since 1992 the number of low-income Zimbabweans who can afford a house--that critical first step toward increased family welfare and economic participation--has tripled to over 70% of the population as a result of reforms negotiated through the USAID program. In FY 1995 over 7,000 low-income households in seven towns received mortgages for core houses. Several thousand more units are presently under construction.
Description: Principal activities supporting this strategic objective include the Private Sector Housing Program and the Zimbabwe Business Development, Zimbabwe Enterprise Development, and Zimbabwe Manpower Development II projects.
Host Country and Other Donors: USAID is the largest donor in the low-income shelter sector, followed by the World Bank. The World Bank has also initiated a new private sector activity with the same name as the USAID project, Zimbabwe Enterprise Development. The Small Scale Enterprise Advisory Development Group serves as a clearinghouse to coordinate donor, the Government of Zimbabwe, and private sector programs for small enterprise development activities.
Beneficiaries: Principal beneficiaries under this strategic objective include low-income Zimbabweans who are seeking either to own a home or to establish or expand a business.
Principal Contractors, Grantees, or Agencies: Contractors: Academy for Educational Development, Planning and Development Collaborative, Inc., International, Abt Associates, Plan Inc., Palmer Associates. Agencies: Ministry of Public Housing and Construction, four local building societies (Zimbabwe Building Society, Beverly Building Society, Central African Building Society, and Founders Building Society), Ministry of Industry and Commerce, Ministry of Justice, National Economic Planning Commission, Barclays Bank, Stanbic Bank. Grantees: International Executive Service Corps, Confederation of Zimbabwe Industries, Zimbabwe National Chamber of Commerce, OpportunityInternational (Zambuko Trust), Mennonite Economic Development Associates (Phakama Savings and Credit Society).
Major Results Indicators:
Baseline Target
Low income housing units built annually 0.6/100,000 1.3/100,000 population
population (1992) (2000)
Number of new employee stock 21 (1995) 130 (2000)
ownership plans, management
buy-outs, employee buy-outs,
and spinoffs
Proportional value of total bank <5% (1995) 10% (2000)
loans from participating
banks going to medium, small, and
micro-enterprise
Proportion of vegetable export <5% (1995) 25% (2000)
production source from small
and medium-sized producers
PROGRAM: ZIMBABWE
TITLE AND NUMBER: Reduced Fertility and Increased Use of HIV/AIDS Prevention Measures,
613-S003
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1997: $8,555,491 DFA
INITIAL OBLIGATION: FY 1996; COMPLETION DATE: FY 2001
Purpose: To sustain reduced levels of fertility so that the population can gain from the benefits resulting from economic growth; and to help reduce the spread of HIV/AIDS in Zimbabwe.
Background: Zimbabwe's family planning program, which USAID has supported as the largest donor since 1980, is possibly the highest impact program in sub-Saharan Africa. The AIDS epidemic is a more recent phenomenon, as is USAID's involvement, and has become extremely serious. It is now estimated that one in four sexually active Zimbabweans is HIV positive.
USAID Role and Achievements to Date: USAID's involvement in AIDS is relatively new and has not yet reached a stage of demonstrable impact. However, important and promising activities aimed at reducing high risk behavior are underway with selected occupational groups such as the uniformed services, transport workers, and students in post-secondary institutions. In family planning the impact has been substantial. Since 1984 the total fertility rate--the average number of children the average Zimbabwean woman will have in her lifetime--has declined by a third, from 6.5 to 4.3. During the same period, the contraceptive prevalence rate has increased by 55% , from 27% of married women in 1984 to 42% in 1994.
Description: Principal activities supporting this strategic objective include the Zimbabwe Family Planning Project and the Zimbabwe AIDS Prevention and Control Project in addition to a number of "buy-ins" to central USAID/W activities and projects such as AIDS Control and Prevention Project (AIDSCAP) and Central Contraceptive Procurement. A future activity aimed at increasing the role of local NGOs in AIDS prevention and counseling is currently in the design phase.
Host Country and Other Donors: USAID collaborates with the World Bank's Family Health Planning II Project and activities supported by the United Nations Fund for Population Agency. USAID is the principal donor in this sector.
Beneficiaries: All Zimbabweans seeking to 1) plan the growth of their families, and 2) avoid contracting sexually transmitted diseases, including the virus that causes AIDS.
Principal Contractors, Grantees, or Agencies: Contractors: John Snow Inc., Macro International, Family Health International, Johns Hopkins University, Deloitte Touche, Association for Voluntary Surgical Contraception, and AIDSCAP. Agencies: Zimbabwe National Family Planning Commission, Ministry of Health, Grantees: Commercial Farmers Union, National Railways of Zimbabwe, Triangle Limited, Delta Corporation, and the University of Zimbabwe Department of Community Medicine.
Major Results Indicators:
Baseline Target
Reduction in total fertility rate 4.3 (1994) 4.0 (1998)
Increase in total number of condoms 33 million (1994) 75 million (1998)
sold or distributed to target population
Increase in percent of target group 29% men (1995) 45% men (1997)
reporting condom use in last 22% women (1995) 33% women(1997)
sexual intercourse
Increased percent of surveyed 33.7% men (1994) 45.0% men (1998)
men with sexually transmitted
diseases seeking medical treatment