HARARE, March 4, 2024 ̶ Zimbabwe remains vulnerable to climatic shocks and without adaptation, climate change will impose high costs on the economy, getting progressively larger over time, and this could cost nearly 5 percent of GDP annually by 2050. To mitigate the impact, Zimbabwe can take immediate low-cost and 'no-regrets' climate actions to build resilience and stem emissions growth, including greening the mining industry, supporting conservation agriculture, and protecting and growing human capital, according to the World Bank.
The Zimbabwe Country Climate and Development Report (CCDR) and the Country Private Sector Diagnostic Report (CPSD) reports launched recently by the World Bank point to Zimbabwe’s abundant natural capital (mineral and renewable) as key to driving the country’s growth potential. Furthermore, leveraging the private sector to build a climate-smart resilient economy could reap dividends for the country that has significant opportunities in several key value chains such as agribusiness, tourism, and green minerals mining.
The CCDR reveals that while Zimbabwe is rich in mineral and renewable natural capital, existing public sector resources to address climate change challenges are limited by inadequate access to development finance and weak domestic revenue mobilization. According to the CCDR, Zimbabwe’s current macroeconomic constraints pose a double bind in which the inability to finance development, climate adaptation, and mitigation leads to increased land degradation, higher net emissions, and less climate resilience.
The CCDR defines a higher growth, greener, and more resilient path out of this double bind by linking demand from global value chains to Zimbabwe’s significant reserves of energy transition minerals. This valuable source of foreign exchange from mining could catalyze investment in renewable energy and fund other climate actions, such as expanding social protection, conservation agriculture, and land restoration.
The report proposes a set of “no-regrets” climate actions that are low-cost and could help shift Zimbabwe to an Upper-Middle Income (UMIC) level.
“Zimbabwe is at a crossroads, and the path that it takes now will have consequences for both its development and climate action, requiring further adaptation measures to limit climate change impacts on GDP growth alongside tough and robust governance systems of the mining sector,” says Victoria Kwakwa, World Bank Vice President for Eastern and Southern Africa.
The Government of Zimbabwe aims to transform Zimbabwe into an upper-middle-income country by 2030. According to the CPSD, the private sector has retained its resilience across many value chains. Sectors such as agriculture and agribusiness, tourism and mining hold significant potential. Zimbabwe has significant growth potential in the short term.
Despite these areas of comparative advantage, Zimbabwe’s economic performance remains frail due to entrenched macroeconomic instability, low investment, and limited structural transformation. The CPSD notes that the primary constraint to development is the chronic macroeconomic instability, historically caused by loose monetary and fiscal policy, foreign exchange rationing, and structural challenges. Therefore, sustaining economic growth will require Zimbabwe to tackle its macroeconomic and structural challenges. tighten fiscal policy and to rein in local-currency liquidity are critical to boosting growth.
“This CPSD for Zimbabwe gives us valuable insights into the challenges faced by Zimbabwe’s private sector,” says IFC Acting Country Manager for Zimbabwe, Vasco Nunes. “By leveraging the recommendations in the report, the government can boost investment, and unlock the latent potential in sectors ranging from agriculture to tourism and mining.”
This CCDR and CPSD are the first such reports in Zimbabwe and aim to support the country’s efforts to achieve its development goals within a changing climate by quantifying its impacts on the economy and laying out a path to robust, climate-resilient growth.
About Country Climate and Development Reports (CCDRs)
The World Bank Group’s Country Climate and Development Reports (CCDRs) are new core diagnostic reports that integrate climate change and development considerations. They will help countries prioritize the most impactful actions that can reduce greenhouse gas (GHG) emissions and boost adaptation, while delivering on broader development goals. CCDRs build on data and rigorous research and identify main pathways to reduce GHG emissions and climate vulnerabilities, including the costs and challenges as well as benefits and opportunities from doing so. The reports suggest concrete, priority actions to support the low-carbon, resilient transition. As public documents, CCDRs aim to inform governments, citizens, the private sector and development partners and enable engagements with the development and climate agenda. CCDRs will feed into other core Bank Group diagnostics, country engagements and operations, and help attract funding and direct financing for high-impact climate action.
About Country Private Sector Diagnostic (CPSD)
The World Bank Group’s Country Private Sector Diagnostic (CPSD) is a core diagnostic report that assesses opportunities for and constraints to private sector-led growth. Each CPSD includes an assessment of the state of the private sector, identification of near-term opportunities for private sector engagement, and recommendations of reforms and policy actions to mobilize private investment and drive solutions to key development challenges. By combining both economy-wide and sector-specific analysis of constraints, the CPSD helps to create a common analytical basis to shape policy dialogue and guide transformational private investment.
