Zimbabwe needs to raise at least US$5 billion a year to transform its economy by 2030, according to a new African Development Bank (AfDB) report that highlights the country’s growing development financing gap.

The AfDB estimates Zimbabwe’s annual development shortfall at US$3.76 billion, citing underinvestment in infrastructure, low productivity and a narrow tax base. The economy is expected to grow by 6% this year as it rebounds from a drought-hit 2024, the bank says. But stronger and more sustainable growth is needed to close the large gaps in public services and infrastructure.

“However, a narrow tax base, large informal sector, and limited tax administration capacity constrain domestic resource mobilisation efforts,” AfDB says. “High public debt, low FDI, and limited access to credit markets exacerbate this gap.”

To close the gap, AfDB calls for reforms that broaden the tax base, improve public financial management, and attract private sector investment. The bank warns that Zimbabwe’s growth outlook is vulnerable, with global economic risks and the suspension of development aid posing new threats.

“This highlights the urgent need to strengthen domestic resource mobilisation, currently hampered by regulatory complexity and low transparency,” AfDB says. “Reforms to simplify the tax system, strengthen institutions, and improve governance are critical to boosting tax compliance and attracting investment.”

Zimbabwe remains locked out of concessional lending from institutions like the World Bank and AfDB because it is still in arrears. As a result, it cannot finance large infrastructure such as dams or roads.

“Full implementation of the debt and arrears clearance strategy is crucial for unlocking new capital,” the report says. “This requires maintaining stakeholder engagement and executing the reforms outlined in the High-Level Structured Dialogue Platform on arrears clearance and debt resolution.”

On how Zimbabwe can grow faster, AfDB recommends that the country shift away from raw exports and start producing higher-value goods. “Scaling up beneficiation and value addition across agricultural and mineral value chains is essential for economic transformation. Producing high-value manufactured goods would not only generate more tax revenue and foreign exchange but also create jobs and reduce reliance on imports.”