After controversial elections, direct aid to Zimbabwe in limbo

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In Zimbabwe, tensions remain high following Saturday’s proclamation that President Robert Mugabe had won last week’s fiercely contested presidential election.

Mugabe’s challenger, Prime Minister Morgan Tsvangirai, has alleged massive fraud and vowed to challenge the results in court. Named prime minister after striking a power-sharing deal with Mugabe four years ago, Tsvangirai has announced that he will refuse to serve in a new government under the longtime Zimbabwean president.

After a decade of unrest and upheaval, the formation of a power-sharing government in Harare had brought a measure of stability to Zimbabwe. Since 2009, Zimbabwe has stamped out once endemic hyperinflation and recorded steady economic growth — critical signs of progress for a country keen on shedding its reputation as Africa’s breadbasket-turned-basket case.

Eager to engage with reform-minded elements of the power-sharing government, many Western aid donors had begun reaching out to the regime in Harare. Even as they continued assistance through nongovernmental channels, beginning in 2001, the U.S. and European governments suspended direct aid to Zimbabwe amid Mugabe’s drive to systematically expropriate white-owned farms.

Following Mugabe’s widely disputed re-election, many analysts fear that Zimbabwe could enter yet another prolonged period of economic stagnation and international isolation. Already, Mugabe loyalists have signaled that they intend to reverse market-based reforms — initiated by ministers allied with Tsvangirai — which are credited with reviving growth. Zimbabwe’s three leading donors — the European Union, the United States and the United Kingdom — have all expressed concern over the conduct of last week’s election.

Below, Devex ranks the leading international donors to Zimbabwe and examines their priorities and programs. Our analysis reveals that even as most Western governments remain reluctant to resume direct aid for as long as Mugabe clings to the presidency, South Africa — Zimbabwe’s neighbor to the south which has ramped up its foreign assistance efforts in recent years — appears ready to fill the void.

European Union

Citing Zimbabwe’s democratic progress, the European Union lifted its 10-year suspension on direct aid to Harare in July 2012. Brussels was the first and to date the only one among the country’s major European donors to normalize aid relations. Over the past year, Brussels has begun to work with Zimbabwe to jointly develop aid programming for the next EU financing period of 2014-2020. For 2013, EU assistance to Zimbabwe — which focuses on food security, social sector and governance programming — is projected at roughly 100 million euros ($133 million).

Following Wednesday’s disputed election, however, it now remains to be seen whether the European Union will press ahead with its resumption of direct aid to Zimbabwe. EU officials have emphasized that Brussels will not hesitate to pull the plug on direct aid yet again should Harare fall short of its commitment to political reform.

United States

Shortly after Zimbabwe’s power-sharing deal was formed in 2009, U.S. President Barack Obama expressed his support for Tsvangirai’s leadership and pledged $73 million in fresh assistance to Zimbabwe. Since then, the Obama administration has signed off on an average $153 million in annual assistance to Zimbabwe, maintaining the United States’ position as Zimbabwe’s largest bilateral donor. The vast majority of U.S. foreign aid to Zimbabwe supports HIV and AIDS prevention, treatment and care programming under the U.S. President‘s Emergency Plan for AIDS Relief.

Reluctant to engage directly with Mugabe’s party, the Obama administration has continued to disburse U.S. aid to Zimbabwe mostly through nongovernmental channels. The administration had, however, begun to deliver aid through select ministries led by Tsvangirai’s allies.

Despite efforts to repeal U.S. sanctions on Zimbabwe in the U.S. Senate, the administration has kept intact Bush-era legislation that prohibits the United States from backing lending to Zimbabwe by international financial institutions. The United States is the largest shareholder at the World Bank and the second-largest shareholder at the African Development Bank — two IFIs which have ceased lending to Zimbabwe as a result of the country’s arrears.

United Kingdom

As part of its aid reform drive, the United Kingdom named Zimbabwe as one of its 28 priority countries in 2011 — a move which surprised some observers in light of the long-strained relations between the two countries. That year, the U.K. Department for International Development announced plans to spend an average of 88 million pounds ($135 million) for its Zimbabwe program through 2015. Reproductive, maternal and newborn health, and poverty, hunger and vulnerability are DfID’s top priority sectors in Zimbabwe.

As in the case of the United States, the United Kingdom has stood by its decade-old policy of channeling aid to Zimbabwe through nongovernmental entities, including the United Nations, as well as civil society and private sector groups. Last week, a DfID spokesman revealed to Devex that the U.K. aid agency will not resume direct aid until it is satisfied with the new government’s commitment to human rights, transparent and accountable government, and improved financial management.

South Africa

Shunned by Western aid donors, Zimbabwe’s cash-strapped government has increasingly turned to its neighbor South Africa to help resuscitate its finances. Most recently, in April, Zimbabwean Finance Minister Tendai Biti revealed that the South African government had approved $100 million in budget support for Zimbabwe. According to some estimates, Zimbabwe ranks among the largest recipients of assistance from South Africa’s fledgling development cooperation program.

Eager to project solidarity with its fellow African countries, South Africa has deemphasized Zimbabwe’s political reform process in its diplomatic and development engagement with Harare, analysts say. Despite Western governments’ concerns over the conduct of Wednesday’s polls, South African President Jacob Zuma has extended his congratulations to Mugabe — an early sign that this trend is likely to continue.

Australia

For 2013, Australian assistance to Zimbabwe is projected to stand at approximately $85 million, representing a quarter of Canberra’s aid budget for sub-Saharan Africa. Zimbabwe has become a major recipient of Australian aid only over the past five years. Australian aid to Zimbabwe — which is largely delivered through nongovernmental channels — focuses on the following sectors: water and sanitation, agriculture and food security, education, institutional strengthening, and economic growth.

Recent positive assessments of the Australian aid program in Zimbabwe have helped fuel Canberra’s strong backing for its robust development engagement in the Southern African country. The 2011 independent review of Australian aid effectiveness had found that Zimbabwe was one of four bilateral programs which were effective overall.

Global Fund to Fight AIDS, Tuberculosis and Malaria

In 2013, the Global Fund to Fight AIDS, Tuberculosis and Malaria plans to disburse $50.5 million in grants to finance programs targeting the “Big 3” communicable diseases in Zimbabwe. Under its new funding model, the agency has also signed off on $311 million in additional HIV and AIDS financing for Zimbabwe from 2014 to 2016. Zimbabwe was one of the first six countries invited by the Global Fund to apply for grants under its new funding model which was launched earlier this year.

Until 2009, the Global Fund had tapped National AIDS Council — a quasi-governmental body — as the principal recipient of its financing for Zimbabwe. Yet following the diversion of more than $7 million in Global Fund grants for Zimbabwe, the agency joined other donors in reducing its direct engagement. The Global Fund now relies on the U.N. Development Program to channel its assistance to Zimbabwe.

Denmark

Between 2013 and 2015, the Danish government has pledged nearly $100 million in aid to Zimbabwe. Governance, democracy and human rights, infrastructure development and agriculture are focus areas for Danish development cooperation with Zimbabwe. The Danish aid program’s activities in Zimbabwe include the establishment of victim-friendly courts and support for a credit facility for small-holder farmers.

In April, Danish State Secretary for Development Policy Ib Petersen became the highest-ranking official to visit Zimbabwe in recent years. During his visit to Harare, Petersen affirmed the Danish aid program’s readiness to re-engage with the country. Denmark had joined other European donors in suspending direct aid to Zimbabwe in 2001. According to its 2013-15 partnership policy with Zimbabwe, Denmark will only consider resuming direct aid engagement with Harare if the country’s political reform process moves forward.

Sweden

Sweden anticipates disbursing $29.2 million in assistance to Zimbabwe in 2013. The lion’s share of Swedish aid to Zimbabwe is earmarked for democracy, human rights and gender equality programming. Expanding access to social services is also fast becoming a priority of the Swedish aid program in Zimbabwe.

Since 2001, Sweden has channeled its assistance to Zimbabwe entirely through civil society organizations and multilateral agencies including UNDP and UNICEF. Sweden has made clear that it will not resume direct aid to Zimbabwe for as long as remnants of the Mugabe regime remain in power. The Swedish government does emphasize that its aid program in Zimbabwe strives to be consistent with Zimbabwean policy whenever possible.

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About the author

  • Piccio

    Lorenzo Piccio

    Lorenzo is a contributing analyst for Devex. Previously Devex's senior analyst for development finance in Manila, he is currently an MA candidate in international economics and international development at the Johns Hopkins School of Advanced International Studies in Washington. Lorenzo holds a bachelor's degree in government and social studies from Wesleyan University.