Financing the Social Sector in Zimbabwe’s Post-Mugabe Era—Obstacles and Opportunities

This chapter reviews the trends in social sector outcomes in Zimbabwe and assesses the financing challenges in the post-Mugabe era. While Zimbabwe made significant progress in developing its social sectors in the post-independence era, the economic crisis experienced from 1998 to 2008 reversed some of the gains that had been achieved. When the country adopted a multiple currency system in 2009, social sector outcomes improved, driven by a favourable macroeconomic environment. From 2016, however, the country’s economic fortunes reversed as the economy began to experience renewed challenges, including falling revenues and declining fiscal space, and shortage of foreign currency to import critical drugs, among other factors. In addition, continued depreciation of the domestic currency since its introduction in 2019 presented additional challenges to the Second Republic, as people’s incomes were eroded while fiscal space continued to be squeezed. The situation was further exacerbated by the advent of the Covid-19 pandemic which affected both the education and health sectors in negative ways. These developments underlined the need for additional financing requirements to close the widening financing gap in social sectors in Zimbabwe. As this chapter shows, some of the possible financing options include broadening the tax base to unlock additional resources particularly from the informal economy, exploring contributory schemes, tapping into international financial assistance, strengthening public–private partnerships and tapping into diaspora remittances. There is also a need for strengthening public institutions to ensure efficiency and effectiveness in utilisation of public funds earmarked for social sectors.