Zimbabwe has received a $5.3 million grant from the African Development Bank (AfDB) to improve the governance and accountability of its state-owned entities.
The grant, approved by the AfDB Board of Directors on December 16, 2023, will finance the Institutional Support for State Enterprise Reform (Isser) project, which aims to strengthen good governance and enhance accountability through supporting interventions regarding public administration, improved service delivery, and financial management.
The project will also support the implementation and roll-out of the hybrid ownership model for state enterprises and parastatals, which involves partial or full privatization of some of the entities.
According to the AfDB, the project is in line with its Zimbabwe strategy to support the private sector and agriculture productivity and sustainability as well as developing related value chains.
Reducing Fiscal Risks and Facilitating Economic Recovery
Zimbabwe has over 100 state-owned entities, most of which are technically insolvent and have been a drain on the national budget. The entities have been facing challenges such as weak corporate governance and financial oversight, corruption, poor financial and operational performance, and ineffective monitoring and evaluation.
These challenges have resulted in most of the entities incurring significant losses, accumulating short-term debt and arrears, and losing market share and competitiveness.
The Isser project will help address these challenges by enhancing Zimbabwe’s capacity to effectively translate into action and implement the existing corporate governance and financial management provisions. This will include designing electronic systems for reporting and monitoring the Public Entities Corporate Governance Act, the Public Finance Management Act, and the Audit Act.
Based on a report by Newsday Zimbabwe, the project will also distribute certified seeds and fertilizer to 180,000 beneficiaries, including around 70,000 women, in the eight farming provinces of Zimbabwe, to boost food production and security.
The AfDB said the project will contribute to reducing fiscal risks and facilitating economic recovery by improving the performance and service delivery of the state-owned entities.
A Part of The African Emergency Food Production Facility
The Isser project is part of the AfDB’s $1.5 billion African Emergency Food Production Facility, a response to the global crisis that has deepened food shortages in many African countries.
The facility focuses on key agricultural commodities, namely wheat, maize, and oilseeds, including soybeans and sunflower, in line with the commodities impacted by the Russia-Ukraine conflict.
The conflict has contributed to a sharp rise in commodity prices, including food and farm inputs, such as fertilizer and seed, affecting the food security and livelihoods of millions of people in Africa.
The AfDB said the facility will help increase cereal and oil seed production, boost fertilizer distribution, and provide policy support over the next two years.
The AfDB is one of the major development partners of Zimbabwe, providing support in various sectors such as energy, water and sanitation, agriculture, social protection, and institutional capacity building.
The bank said it remains committed to supporting Zimbabwe’s efforts to achieve inclusive and sustainable development.
The grant from the AfDB is a sign of hope for Zimbabweans, who have been suffering from economic hardships, political instability, and social unrest for decades.
The country has been under international sanctions since 2002, following allegations of human rights violations and electoral fraud by the former regime of Robert Mugabe, who was ousted in a military coup in 2017. The current government of President Emmerson Mnangagwa has been trying to re-engage with the international community and implement reforms to revive the economy and restore democracy.
However, the country still faces many challenges, such as high inflation, currency volatility, corruption, poverty, unemployment, and climate change.
The grant from the AfDB is expected to help Zimbabwe address some of these challenges and improve the living standards of its people.
