It was during this shift in urban policy that the country of Zimbabwe approached the World Bank about the possibility of an urban development loan. According to Fred King of the Southern Africa Department of the World Bank, Zimbabwe requested the Bank's consideration of funding a rapid railway system between the capital city of Harare and the satellite township of Chitungwisa.1 In response, the Bank sent an urban sector mission to Zimbabwe in 1981 in order to ‘get a sense of the priority of issues that the government should be grappling with in the urban sector, rather than just helping it build a railway line.’2 The mission to Zimbabwe produced a detailed report on the urban condition in the country, and recommended a series of policy changes, repeatedly commenting on the need to address ‘the extreme duality of Zimbabwe's economy’ (World Bank, 1985).3 For the Bank, the solution to the duality was to provide low-income areas with the same kind of institutions and services that were available in the middle and high-income areas. In essence, this strategy entailed increasing home ownership and utilizing the private sector to expand market-oriented housing delivery.
The aim of this paper is to offer a critical overview of the World Bank's urban programmes in Zimbabwe. The first part identifies the core features of the Bank's urban programmes in Zimbabwe. The World Bank's own assessments of its efforts in Zimbabwe adopt a self-congratulatory tone, claiming that the ‘highly satisfactory’ projects were ‘an excellent example of privatised housing finance’ (World Bank, 1995: 12). The second part of this paper, in contrast, will argue that the Bank did not, in fact, influence the broader policy climate in a manner that improved the lives of the urban poor.
The World Bank's urban programmes in Zimbabwe
Effective in 1985, the Bank's first urban development project in Zimbabwe, called Urban I, set out to implement the recommendations of the urban mission's report. The main objective of the project was to ‘increase the supply of affordable housing and related services to large segments of the poorer population, and to improve the system of housing finance’ in four major cities: Harare, Bulawayo, Mutare, and Masvingo (World Bank, 1984: 8). The Bank tried to incorporate its evolving policy of privatisation and reduction of urban subsidies into its urban programmes in Zimbabwe by involving local building societies. Although these societies were the traditional source of financing for middle and upper-income mortgages, the Bank sought their participation to cover the capital costs of plot and housing construction for low-income groups also. By involving the building societies, the Bank aimed to bring together two separate systems of housing finance delivery that had existed in Zimbabwe prior to independence. In other words, the Bank sought to integrate private-sector-based financing options that served middle and upper-income households with the public-sector-based financing delivery options intended for low-income households. Building societies were identified as the means to that end. Initially, the Bank found it difficult to persuade the building societies to fund low-income housing on a non-subsidised basis. As Jeff Racki, Urban I's task manager, recalls,
They weren't exactly jumping up and down to fund low-income housing. The old codgers who ran the building societies were part of an old regime and their mindsets were not going to shift very easily. 4
However, the collapse of the middle and high-income housing market ‘helped to convince building societies to finance low-income housing because they weren't lending to anyone.’6 The World Bank sector report on urban development in Zimbabwe echoed this observation:
A case could also be made for involving the building societies in low-income housing simply to preserve their dynamism during the period of a depressed upper-income housing market. At present, there is no sign that the slump is abating and it may well last for years. It is not clear that the building societies could survive, as mortgage lending institutions, without entering the low-income housing field in one way or another (World Bank, 1985: 81).
As in Urban I, the building societies provided the necessary finance for the purchase of plots as well as the construction of dwelling units in Urban II. The Bank regarded the involvement of the building societies in both Urban I and Urban II as a key strategy in reducing the financial burden on the public sector9 and envisioned that their participation would eventually ‘restructure the financing of low-cost housing so that government funds are replaced by private sector resources.’10
The World Bank hailed the entry of building societies as a success because the initial fear of potentially high default rates proved to be unfounded. Defaults were rare up to the mid-1990s; in fact, a Bank review found that default rates were actually higher for upper-income groups (World Bank, 1994). When allottees did have difficulty meeting their monthly payments, high demand enabled them to sell their properties at a profit. Furthermore, building societies were able to do the same with repossessions.
By the closure of Urban I in 1994, some 18,000 residential plots and community facilities had been made available for low-income residents in four cities. Urban II, on the other hand, was implemented country-wide and involved over 21 cities and towns in Zimbabwe. The Bank's report of Urban II stated that some 30,000 stands for low and middle-income housing were built before the project's completion in 1999. During the course of the project, 29,328 mortgage applications were received by the building societies, of which 22,432 were approved (out of a target of 24,000) for the value of approximately Z$570 million (US$16 million). Approximately 11,200 stands were completed in Harare alone for the duration of Urban II (World Bank, 2000). The World Bank's projects in Zimbabwe led to some gradual, limited improvements in housing conditions and access to facilities for some of the urban poor. The projects were also able to extend private sector finance to low-income families on a limited basis.
The Bank concluded that its urban projects forged an effective link between the public and private sectors and reduced the fiscal burden on the public sector. In its evaluations of Urban I and II, the Bank proclaimed that the successes and benefits of these new sector-wide projects surpassed the project-by-project approach of the 1970s:
The project provides an excellent example of a case where the traditional public sector role in housing is reduced from that of total provision to the more limited one of servicing residential land, leaving the financial and actual contraction of the dwelling units to the private sector. The projects demonstrate how low-income households can have access to finance by providing an enabling environment for the housing sector (World Bank, 2000: 8).
Critique of the World Bank's urban programmes in Zimbabwe
The Bank claimed that Urban I and II created alternative, enabling, and sustainable structures for low-income housing finance in Zimbabwe. This evaluation, however, does not stand up to empirical scrutiny. In addition to logistical problems encountered during the projects' implementation, there is some incongruity between the Bank's own evaluations and the projects' actual impact.
Urban I and Urban II did not reach the poorest segments of the urban population, despite their aims to do so. Most of the urban poor could not meet the eligibility criteria for building society loans. From the Bank's perspective, the primary objective of Urban II programme was to encourage private sector financing for low-income housing in the long term:
The private sector will provide all financing for low-income housing. Broader-based investment in building societies will occur through the creation of several new mechanisms to raise long-term housing finance. The result is that the societies' low-cost mortgage portfolio will expand and the government's long-term portfolio will correspondingly diminish. 11
In sum, the World Bank's programmes may have increased access for a few low-income residents, but they have only marginally affected the overall critical housing shortage in Zimbabwe, which is primarily due to insufficient availability of finance for housing development. The National Housing Fund's resources have been exhausted and have not been replenished.12 To complicate matters further, the World Bank suspended aid to Zimbabwe as of November 2000 because of political instability. However, even with international assistance, the majority of households on the waiting lists did not qualify for finance under existing eligibility criteria. At present, the housing crisis is compounded by the international development agencies' policies of fiscal management and austerity, as well as the imprudent choices of the domestic elite in Zimbabwe.
The Zimbabwe government opted for a pragmatic approach to development following independence. The World Bank programmes did not attempt to transform the colonial basis of economic and spatial inequality in Zimbabwe. While the Bank, as pointed out earlier, viewed the problem as one of ‘extreme duality’, it recommended an extension of the market-based system into the black townships as a solution (World Bank, 1985). However, the differences and unequal relationships between black high-density townships and former white residential areas in Zimbabwe are better captured by the idea of uneven capitalist development (Bond, 1998; Smith, 1984). Consequently, a number of the urban poor's hardships were unaddressed by both government and World Bank initiatives, such as the high transportation costs and related problems resulting from the white regime's deliberate location of the high-density black townships on the urban periphery in order to separate the racial groups.
The potential gains of Urban I and Urban II were further limited due to the impact of structural adjustment programmes on the political economy in Zimbabwe, as well as the choices of the domestic ruling elites. In March 1991, the Zimbabwean government developed and implemented what came to be known as a ‘home grown’ Economic Structural Adjustment Programme (ESAP) (Stoneman, 1993: 89). ESAP mirrored the programmes of the World Bank and the IMF in that it included devaluation of currency, export promotion, trade liberalisation, privatisation of government enterprises and parastatals, and reduction of expenditure in the social service sectors such as education, health, and housing. Assessing whether ‘external capitulation or domestic reform’ caused the Zimbabwe government to embrace market-based reforms and privatisation, Dashwood argues that while Zimbabwe had been under considerable pressure from the World Bank and IMF to liberalise its economy since 1982, the ‘initiative for reforms came from within Zimbabwe’ (Dashwood, 1996: 29). However, once the reforms were implemented, the influence of the World Bank and IMF grew considerably.
ESAP was far from successful. Its targets for growth and development were missed by huge margins and real wages fell by about 30 per cent since its implementation in the early 1990s (Stoneman, 1999). The exclusive focus on exporting primary products to an increasingly hostile international economy, which was bogged down in recession, did not generate internal economic growth in Zimbabwe. Furthermore, Zimbabwe had very little control over the international prices of the primary commodities, which plunged to historic lows during the 1990s. Consequently, formal sector employment declined and public services in health, education, and housing were cut deeply, thereby worsening the plight of the urban poor, and making it extremely difficult for them to meet their basic needs (Gibbon, 1995; Tevera, 1995). The deteriorating macroeconomic climate, induced in part by the structural adjustment programmes, eroded the limited gains of Urban I and II. The Bank's technocratic emphasis on reducing and/or eliminating public sector spending on social expenditures failed to generate alternatives for addressing the needs of those on the economic margins of Zimbabwean society. In examining the impact of the Bank's structural adjustment programmes and private sector initiatives, ul Haq (1998) notes that while the need for developing countries to trim their budgets is not disputed, the downsizing was always done in a manner that adversely affected the poor.
Furthermore, in March 1997, a major national scandal erupted when it was discovered that Z$450 billion were ‘missing’ from the War Victims' Compensation Fund, which was set aside to compensate ex-combatants for injuries suffered during the Liberation War. President Mugabe appointed a judicial commission of inquiry chaired by Justice Godfrey Chidyausika, which then revealed that senior officials in the political and military wings of government, including the late First Lady's brother, had appropriated the fund.13 The powerful Zimbabwe National Liberation War Veterans Association, under the leadership of Chenjerai Hunzvi, staged mass demonstrations from June through July 1997, meeting with and finally compelling Mugabe to agree to a lump sum payment of Z$50,000 to all ex-combatants who fought in the national liberation struggle, plus a Z$2,000 monthly allowance. Since many of the ex-combatants populate the military and police forces, Mugabe agreed to these demands without consulting his cabinet or parliament, putting additional stress on the country's already weak economy. Furthermore, Mugabe announced that 1,480 of mostly white-owned farms would be seized and 20 per cent of the land would be distributed to the War Veterans. On 14 November 1997, also known as ‘Black Friday’, Mugabe's unbudgeted Z$4 billion settlement with the War Veterans resulted in the collapse of the Zimbabwean dollar, which fell by 75 per cent in just a few hours. Interest rates were increased by 6 per cent in the course of the next month, as were sales and petrol taxes, in order to help cover the costs of this scheme (Brickhill, 1999).
Private sector financing for low-income housing, an integral part of the Bank's housing programme, evaporated in this deteriorating political and economic climate. According to Colleen Butcher, a resident representative of the World Bank in Harare, building societies were still willing to finance low-income housing, but it was not viable for them to do so in such an environment. With interest rates skyrocketing, building societies were investing their deposits in money markets, not issuing mortgages. Given the absence of a public sector housing programme in Zimbabwe due to the factors discussed above, the urban poor were forced to rely on their own meager resources once again to house themselves.
The poor experienced additional hardships because of the structural adjustment programmes and price hikes in the aftermath of Black Friday. Their massive and violent demonstration over rising food prices in Harare in January 1998 left nine dead, hundreds injured and caused over Z$70 million in damage. The contempt of the ruling elites to the plight of the poor was demonstrated further by the fact that during the same week, the government announced that it had spent some Z$60 million on fifty new Mercedes-Benz automobiles for twenty-six cabinet ministers and two vice-presidents. Additionally, instead of committing resources to provide for the basic needs of Zimbabwe's own lower classes, the Mugabe government committed troops to a foreign war in the Democratic Republic of Congo at a cost of nearly US$1 million a day.
With respect to low-income housing in particular, about US$3 million from the National Housing Fund and the National Housing Guarantee Fund were ‘borrowed’ by Mugabe's wife, Grace, in order to build herself a 32 room house with three servant cottages in a rich suburb of Harare in 1998. Nicknamed ‘Graceland’, the house is hardly used because the First Lady ‘changed her mind about living so far away from the city centre.’
The crisis facing the urban poor was exacerbated in May 2005, during the Zimbabwean winter, when government security forces launched Operation Murambatsvina (which means ‘clean out the trash’ in the Shona language), a massive slum and squatter removal campaign in Zimbabwe's major cities. In the once flourishing city of Victoria Falls, some 30,000 people were evicted from their informal settlements and in the capital city Harare, entire squatter settlements were burnt down (The Independent, 12 June 2005). President Mugabe declared that the mass eviction ‘Operation Murambatsvina was needed to restore sanity to Zimbabwe's cities’ (reported on the BBC, 17 June 2005). In an address to the central committee of the ruling ZANU-PF party, Mugabe characterised the demolitions as an important part of the ‘urban renewal’ of Zimbabwe:
Our cities and towns had become havens for illicit and criminal practices and activities which just could not be allowed to go on. From the mess should emerge new businesses, new traders, new practices and a whole new and salubrious urban environment. That is our vision.
The Mugabe government's rationale for this policy is that it restores law and order, curbs the chaotic growth of informal settlements, and strengthens the formal economy. However, the worsening conditions in Zimbabwe's cities during the last ten years were caused by the neo-liberal policies implemented by Mugabe under the guidance and instruction of the World Bank. The ESAP programme, mentioned above, contributed to severe job losses in the urban areas. As a result, the workers had to generate their own incomes in the informal sector, interestingly, at the government's own urging. In fact, the government pressured local authorities to relax standards to accommodate informal economic activities. However, in a puzzling change in policy, the Mugabe regime became obsessed with ‘the illegality’ of the informal economy in May 2005.
A major factor prompting Mugabe's assault on the urban poor is his desire to crush the oppositional party's Movement for Democratic Change (MDC), because the primarily urban based MDC threatened the ZANU-PF stranglehold on power. Welshman Ncube, secretary general of the MDC, characterised operation Murambatsvina as an ‘harassment campaign against urban voters’. In the March 2005 elections, Mugabe's ruling ZANU-PF party lost the cities to the MDC. Many ZANU members' homes and informal businesses were destroyed in the government's retributive campaign, which not only aimed to curb dissent, but also attempted to gain control of the informal economy that had operated outside of the government's grip during the last few years. Elliot Manyika, ZANU-PF's national commissar, said that ‘the economy needed to account for informal business and order needed to be restored in urban areas.’ During its raids, the government discovered large caches of foreign currency in the urban homes of informal traders. The campaign against informal markets was an attempt by the Mugabe government, which faces a dire shortage of foreign currency, to get a better grip of foreign currency transactions.
However, instead of restoring law and order, this campaign has only deepened the country's political and economic crisis. Inflation is around 144 per cent, the unemployment rate is estimated at 70 per cent, and some 3 million people are facing the prospect of starvation (Business Day, 12 September 2005). Current World Bank president Paul Wolfowitz has characterised the situation as ‘a tragedy’. However, such an understatement is somewhat disingenuous from the head of an institution that bears at least partial responsibility for the misguided policy choices of the Mugabe regime. Structural adjustment contributed to structural collapse in Zimbabwe.
Zimbabwe's critical shortage of housing for the low-income urban poor ranks next to unemployment as the most serious problem confronting the country in the post-independence period. Seen in the above context, while the World Bank's projects did enable some low-income urban families to gain access to credit, they certainly did not provide an ‘alternative and sustainable structure’ for low-income housing finance or an ‘enabling’ environment for low-income housing delivery, contrary to the World Bank's initial expectations and final evaluations. First, the programme did not reach the poorest segments of the urban population, who were excluded because of eligibility criteria and lack of finance. Second, absentee landlordism and raiding by high-income groups prevented the poor from reaping the benefits intended for them. Third, while there were some successes, the programmes failed to address the extent of the low-income housing problem in urban Zimbabwe. Fourth, the programme failed to improve the lives of the urban poor in light of the degenerating political and economic climate of the mid to late 1990s. Thus, the multilateral development agencies' fundamentalist faith in the ‘magic of the market’ and fiscal austerity have not only failed to offer any viable strategy for dealing with growing inequality, but have actually exacerbated it.