Good governance the key to donor funding

HARARE - A strategy is being devised to allow donors to sidestep Zimbabwe's central bank and channel funds directly to a ministry controlled by Prime Minister Morgan Tsvangirai's Movement for Democratic Change (MDC) party.

A tussle over the “unilateral” appointment of Gideon Gono as governor of the Reserve Bank of Zimbabwe, by President Robert Mugabe, leader of the ZANU(PF) party, as well as the selection of ZANU(PF) loyalist Johannes Tomana to the position of attorney general, has become one of the most divisive issues since the formation of the government of national unity on 11 February.

Gono, whose tenure at the central bank coincided with hyperinflation and extinction of the Zimbabwe dollar, has also admitted to raiding the bank accounts of private individuals and NGOs for foreign currency.

The MDC argues that the Gono and Tomana appointments were in contravention of the Global Political Agreement (GPA), which set up the unity government, as both positions required selection by consensus, which did not occur.

Mugabe has stood firm, and recently enlisted the support of the armed forces, who declared earlier this month that Gono’s position as central bank governor was “non-negotiable”.

After months of bitter turf wars over who would control donor funds, MDC finance minister Tendai Biti appears to have booked the pound seats. A facility known as the Multi-Donor Trust Fund, which functions under the auspices of his ministry, will be responsible for receiving donor funding; the dissemination of monies will fall under a cabinet committee on aid coordination, chaired by Tsvangirai.

Gorden Moyo, an MDC minister of state, told local media the arrangement was designed to allay fears in the donor community that channelling money through the central bank would provide no guarantees on how it would be spent.

“We now have a framework of operation, and it sends a clear message that Zimbabwe is ready to receive aid and use it effectively for the benefit of the people of Zimbabwe,” Moyo said.

Tsvangirai is attempting to persuade the US and Western Europe to release billions of dollars to help resurrect the near collapsed country. However, donors have been reluctant to provide large-scale development assistance unless they see tangible reforms, including a return to the rule of law, press freedom, and effective financial controls to guarantee that funding reaches the intended recipients.

Tsvangirai has said that more than US$8 billion would be required to kick-start Zimbabwe’s ailing economy. The recent pledge by US president Barack Obama to release $73 million for humanitarian assistance, on condition that the money would not go through the central bank, appears to be a sign of confidence in the new mechanism.

The US Senate said in a resolution that it would provide resources to “NGO entities to provide assistance and to pay salaries or fees to appropriately qualified people in Zimbabwe to enable progress to be made in the critical areas of education, health, water and sanitation.”

Health, water and sanitation, and education all fall under ministries controlled by the MDC, although higher education falls under a ZANU(PF) minister.

The German government has promised Tsvangirai $34.8 million, while Norway has given 42 million kroner ($6.5 million), bringing its contribution to Zimbabwe’s reconstruction to $31 million so far in 2009.

In a statement the Norwegian government said, “The funds will mainly go to areas that Mr Tsvangirai’s party, the MDC, is responsible for: basic education, health services, and promoting democracy. The funds will not be channelled through the government financial system, but through the UN, the World Bank and NGOs.”

Further measures to restore international confidence in Zimbabwe’s financial management system are the scrapping of the Audit and Exchequer Act, and its replacement with the proposed Public Finance Management law, which will provide a regulatory framework with a strong emphasis on good governance and compel ministries to table their spending reports in Parliament, bringing about greater transparency in the administration of public funds.

Ensuring that the financial mechanisms were in place has been crucial, as huge sums of money are being spent just to keep Zimbabwe treading water.

Tsitsi Singizi, spokesperson for UNICEF, the UN Children’s Fund, told IRIN that her agency among others was contributing about $1.6 million monthly to top up salaries for health workers, and also procured and distributed 70 percent of all essential medicines, from painkillers to antibiotics. The funds have been delivered through a private overseas logitical agency.

In the past two years UNICEF has spent $12 million supporting more than 2,000 schools with text books, stationery and furniture, and has been addressing sanitation concerns – in the wake of a cholera epidemic that has killed thousands – by drilling 140 of a planned 200 boreholes in cholera-affected areas.

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