AFRICAN DEVELOPMENT BANK LOOKS FOR MORE ENGAGEMENT

C O N F I D E N T I A L SECTION 01 OF 02 HARARE 000785

SIPDIS

AF/S FOR B.WALCH
DRL FOR N. WILETT
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
STATE PASS TO USAID FOR J. HARMON AND L. DOBBINS
NSC FOR SENIOR AFRICA DIRECTOR M. GAVIN

E.O. 12958: DECL: 10/07/2019
TAGS: ECON EFIN ZI
SUBJECT: AFRICAN DEVELOPMENT BANK LOOKS FOR MORE ENGAGEMENT
WITH ZIMBABWE

Classified By: CDA Donald Petterson for reason 1.4 (d)


1. (C) SUMMARY: The local mission chief and a high-powered
team of consultants for the African Development Bank (AfDB)
discussed prospects for expanded engagement with the GOZ and
sought USG views in a September 24 meeting with Charge. In
recent consultations with GOZ officials, AfDB staff
encountered strong expectations for more multilateral and
bilateral support. AfDB staff seemed inclined to think that
not meeting those expectations could have negative
consequences. Charge said the GOZ's progress toward key
benchmarks remained insufficient, and the USG could not yet
expand its engagement beyond the present "humanitarian plus"
framework. The AfDB would like to see donor support
accelerated, but its lack of resources will force it to
accept the speed limit set by the rest of the international
community. END SUMMARY.


2. (U) Local AfDB Mission Chief Damoni Kitabire called on
Charge to discuss prospects for more engagement with
Zimbabwe. Kitabire was accompanied by a team of four
consultants, including former World Bank Vice President
Russell Cheetham, who had spent more than a week in
back-to-back meetings with GOZ officials to identify needs
and discuss potential new initiatives.


3. (U) Kitabire told Charge that AfDB could use its Fragile
States Facility (FSF) to support projects in Zimbabwe even
before the GOZ cleared its arrears with international
financial institutions (IFIs). He said AfDB could use FSF to
support technical assistance, arrears clearance, and
rehabilitation of infrastructure. So far, AfDB had committed
USD 6 million to technical assistance focused on public
financial management. A further USD 2 million could be used
to assist the Ministry of Planning and the Central
Statistical Office. Kitabire said that expansion of AfDB
assistance to infrastructure rehabilitation would require
replenishment of the FSF. Following consultations with the
GOZ, AfDB would likely identify the power sector and the
water and sanitation infrastructure as the main priorities
for expanded assistance.


4. (C) Members of the AfDB team said their GOZ contacts,
primarily in the Ministry of Finance, believed Zimbabwe was
in "a moment of change." Some GOZ officials were
disappointed that they were not receiving more assistance
from the international community. There were "tremendous
expectations" that AfDB could do more -- and disappointment
upon learning that AfDB had "empty pockets." The AfDB team
feared there could be negative consequences if donors delayed
expanded engagement with the GOZ. The Economics and Finance
Ministries, for instance, were working on medium-term plans
that would lead to a Poverty Reduction Strategy Paper. They
were also fighting an uphill battle to persuade ZANU-PF
ministers that Zimbabwe should seek debt relief under the
Highly Indebted Poor Countries initiative. The consultants
QHighly Indebted Poor Countries initiative. The consultants
feared that without clearer prospects for expanded donor
engagement, these important efforts would run aground.
Furthermore, if there was not more financing for the private
sector, Zimbabwe's economic recovery would fizzle.


5. (C) Charge replied that the USG had not seen enough
progress under the inclusive government to warrant new
bilateral commitments beyond the "humanitarian plus"
framework now in place. While the GOZ had achieved important
reforms, the Global Political Agreement that brought about
the inclusive government had not yet been fully implemented.
As a consequence, the Charge said, the USG was not ready to
provide funds directly to the GOZ. Charge added that the USG
did not have an explicit checklist of actions that would show

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when new types of engagement were justified, "but we will
know it when we see it."


6. (C) COMMENT: The AfDB for now is not in a position to
expand engagement, but there is obvious sentiment to do so,
and AfDB assistance would be welcomed by the GOZ,
particularly the Ministry of Finance. In the end, however,
the necessity for donors to provide funds to the AfDB for
Zimbabwe will prevent the Bank from getting out ahead of the
rest of the international community. END COMMENT.

PETTERSON