The Probationary Note: Zimbabwe Earns a Break, Now Must Prove It Deserves It

By Newton M. Mambande

HARARE – THE World Bank’s decision to remove Zimbabwe from its list of fragile and conflict-affected states is more than a statistical update. It is a signal to investors, development partners, and Zimbabweans that the narrative of perpetual crisis is no longer the only story told about the nation.

For over a decade, “Zimbabwe” and “fragile” were used in the same sentence. Hyperinflation wiped out savings in 2008. Dollar shortages choked industry in 2019. Political contestation and policy uncertainty kept capital away.

This delisting signals that something has changed. However, it is not a graduation certificate; it is a probationary note.

A balanced analysis requires two things simultaneously: acknowledging the recovery while interrogating the fragility that remains. If we only celebrate, we risk complacency. If we only criticize, we overlook real progress.

Here is that balance.

PART 1: WHERE PROGRESS IS VISIBLE

1. From Crisis Economy to Relative Stability
The defining feature of Zimbabwe’s crisis economy was volatility. Hyperinflation, peaking at 500 billion percent in 2008, destroyed confidence. The multi-currency era brought stability but created liquidity shortages, and the 2019 currency reforms triggered another inflation spike.

Today, we observe relative price stability. The introduction of the ZiG, backed by gold and foreign currency reserves, alongside tighter monetary policy, has helped anchor expectations. Month-on-month inflation has dropped from triple digits to single digits.

GDP growth has also returned. For three consecutive years, growth has averaged above 4%. Mining—particularly gold, lithium, and platinum—remains the anchor. Agriculture has recovered with improved rainfall and the Pfumvudza program. Services, especially fintech and retail, are expanding.

This is not boom-time growth, but it is growth without printing money to cover deficits. That alone represents a structural shift.

2. Remittances: The Unsung Stabilizer
According to Reserve Bank of Zimbabwe (RBZ) data, diaspora remittances now exceed $2 billion annually—larger than foreign direct investment (FDI) and portfolio inflows combined.

These flows accomplish three things:

1. Consumption smoothing: They fund school fees, healthcare, and groceries, reducing poverty.
2. Investment: Remittances finance housing, small and medium enterprises (SMEs), and equipment purchases.
3. FX supply: They provide foreign currency to the market, easing pressure on the formal system.

More importantly, remittances signal trust. Zimbabweans abroad would not send money home if they believed it would be lost to hyperinflation tomorrow. That trust is a form of economic recovery.

3. Institutional Re-engagement with the World
The World Bank does not delist countries lightly. This move reflects improved dialogue. The Ministry of Finance has been engaging on the Arrears Clearance and Debt Resolution Process under the facilitation of former President Joaquim Chissano.

This re-engagement matters because it unlocks concessional lending, technical assistance, political risk guarantees, and private-sector financing. For 15 years, those doors were closed. Now they are open a crack.

4. Banking and Payments System Functionality
Despite challenges, the banking sector remains solvent. RTGS, mobile money, and card payments function effectively. This is basic infrastructure that many fragile states lack, enabling business to continue even amid policy uncertainty.

PART 2: THE RED FLAGS THAT KEEP FRAGILITY ALIVE

Being removed from the fragile list does not mean we are resilient. The World Bank’s own index weighs institutions, violence, and economic shocks. On several of these, Zimbabwe still scores poorly.

1. Credit Rating, Arrears, and Debt Distress
Zimbabwe owes over $6 billion in external arrears to the World Bank, African Development Bank (AfDB), Paris Club, and bilateral creditors, and remains in debt to the IMF.

Why does this matter? Until arrears are cleared, we cannot access new concessional loans. Our credit rating remains in “default,” pushing borrowing costs to 12–18% for corporates and discouraging FDI.

The Arrears Clearance Roadmap is the single most important reform on the table. Without it, this delisting remains largely symbolic.

2. Policy Inconsistencies: The Confidence Killer

Ask any investor what keeps them up at night. The answer is rarely tax rates—it is policy uncertainty.

Over the last five years, we have experienced four currency regimes, multiple changes to export surrender requirements, abrupt statutory instrument changes, and shifting indigenization rules.

Capital is patient but not foolish. Long-term investment in factories, mines, and farms requires 10- to 20-year horizons. If the rules change every budget cycle, capital flows to Zambia, Botswana, or Rwanda instead.

Policy consistency for three to five years is the minimum needed to convert this World Bank signal into tangible investment.

3. Corruption and Governance Leakages
Corruption is not just a moral issue; it is an economic tax.

Leakages in public procurement, mining licenses, and fuel subsidies mean that revenue intended for roads and clinics disappears. The Auditor General’s reports year after year highlight recurring issues: lack of transparent tender processes, ghost workers, and unaudited state-owned enterprises (SOEs).

Until we see consistent high-level enforcement, asset recovery, and stronger protections for whistleblowers, governance will remain a fragility driver. Investors and lenders pay close attention to Transparency International scores.

4. Political Violence, Conflict, and Civic Space
Large-scale political violence has declined since 2008—that is progress. However, pockets of violence, intimidation, and contestation around elections still emerge. The World Bank’s fragile states index heavily weights political stability and rule of law.

Fragility is also about perception. If international media reports crackdowns every election cycle, risk departments in London and New York downgrade Zimbabwe regardless of GDP numbers.

Lasting stability requires not just the absence of conflict, but the predictable application of the law for all citizens and political actors.

5. Institutional Weaknesses: Capacity and Autonomy
Many state institutions lack three things: capacity, transparency, and autonomy.

Ministries are often understaffed and underfunded. Regulators are sometimes overruled by political considerations. SOEs like ZESA and ZINARA operate at a loss and depend on government bailouts.

Fragile states are defined not by poverty alone, but by states that cannot effectively implement policy. We are improving, but implementation gaps remain wide.

6. From Hyperinflation to Deflation: A New Risk
We have escaped hyperinflation, but now parts of the formal economy face deflationary pressures. Prices are falling, yet wages are not rising.

While this may appear beneficial to consumers, it is dangerous. Deflation means businesses earn less revenue, cut jobs, and pay less tax. Government revenue falls, and the deficit widens.

At the same time, a massive informal economy operates outside policy reach. Over 80% of employment is informal, meaning monetary policy does not fully transmit. This is a classic sign of a crisis economy trying to normalize without complete formalization.

7. Remittances and Foreign Dividend Repatriation
One specific investor concern is the repatriation of foreign dividends. Companies earn in USD but struggle to remit profits due to FX shortages and priority lists.

Even with improved stability, if an investor cannot take profits home, they will not come. The RBZ has improved the auction and interbank system, but consistency and transparency in allocation remain areas of concern.

PART 3: WHAT THIS MOMENT MEANS FOR DIFFERENT ACTORS

For Government
This is a 24-month test. To remain off the fragile list, the government should consider:

1. Finalizing the Arrears Clearance Plan with creditors to unlock $3–4 billion in new financing.
2. Locking policy for five years: Publish and adhere to a five-year tax, currency, and investment policy framework.
3. Depoliticizing institutions: Strengthen the independence of ZIMRA, the National Prosecuting Authority (NPA), and procurement authorities.
4. Publishing data: Regular release of monthly inflation, debt, and procurement figures would help build trust.

For Investors and Business
Do not confuse “no longer fragile” with “low risk.” Due diligence remains critical. Key questions to ask:

• Can I remit dividends?
• Is my contract enforceable in court?
• What is the three-year policy trajectory?

The opportunity is real in mining, energy, agriculture value chains, and housing—but price it with the remaining risks.

For Citizens and Civil Society
Economic recovery must translate to jobs, clinics, and stable prices. Demand accountability, use budget tracking tools, and support institutions that fight corruption.

A country is not resilient because the World Bank says so. It is resilient because citizens can hold it to account.

For Development Partners
This delisting should trigger a shift from humanitarian aid to development financing—more budget support, technical assistance, and guarantees for private investment in infrastructure.

PART 4: SCENARIOS FOR THE NEXT 3 YEARS

Scenario A: Consolidation
The arrears roadmap is signed. Policy remains consistent. Inflation stays under 10%. FDI rises to $1 billion/year. Zimbabwe moves to “pre-investment grade” by 2028. This is achievable if reforms are sequenced effectively.

Scenario B: Stagnation
No arrears deal is reached. Policy flip-flops continue. Growth hovers around 3%. We avoid crisis but fail to attract capital, remaining in a “stable but poor” equilibrium.

Scenario C: Backslide
Election-related violence, another currency change, or a debt shock pushes us back into crisis indicators, prompting the World Bank to re-list us.

The difference between Scenario A and Scenario C is not luck—it is choices.

CONCLUSION: OUT OF THE ICU, INTO REHAB

Zimbabwe’s removal from the fragile states list is earned. It reflects real progress: an end to hyperinflation, a functioning payments system, and a government re-engaging with the world.

But we are not yet resilient. We remain in arrears. Our credit rating is distressed. Corruption, policy inconsistency, institutional weaknesses, and periodic political tensions persist.

The metaphor is simple: we are out of the ICU. The patient is stable. Now comes the hard part—rehabilitation. That means daily exercise in governance, fiscal discipline, and the rule of law.

If we commit to the rehab, Zimbabwe can move from “no longer fragile” to “resilient and investable” within this decade. If we don’t, this delisting will be remembered as a false dawn.

The World Bank has given us the benefit of the doubt. Now we must prove them right.

Newton M. Mambande is a researcher and entrepreneur. He can be reached at newtonmunod@gmail.com or +263773411103.