Memorandum audit report on Zimbabwe agricultural sector assistance program

Audit report covers the period 9/29/82-8/31/85 and is based on review of USAID/Z financial records, site visits, and interviews with USAID/Z, Government of Zimbabwe (GOZ), and contractor personnel. The project has been successful overall, due in large measure to use of the Commodity Import Program (CIP) mechanism and heavy involvement of the private sector. Nearly all of the US$30 million planned for the CIP has been allocated, over 80% of it targeted to the private sector to finance industrial modernization, letters of credit, and imports. Imported commodities were effectively utilized to improve the Zimbabwean economy. In addition, US$17.7 million in related local currency generations (LCG"s) have been deposited into a special account, and activities are being planned or underway in all 7 program areas. Implementation has been weak in two areas, however. (1) Due in part to the GOZ"s failure to estimate cash requirements, including cash receipts and expenditures, the project has forfeited some US$560,000-875,000 in potential yearly income earnings by placing Z$12.5 million in LCG"s in non-interest bearing accounts, although another Z$8.0 million in LCG"s is earning US$470,000 in 6-12 month interest bearing accounts. Given this history, it is likely that a large part of the US$13.4 million in LCG"s expected over the next six months will remain idle. (2) Most GOZ implementing ministries had not submitted quarterly progress reports on their program-funded projects, as required, despite requests by the coordinating ministry; as of 1/86, however, reports have been received on all but two projects. It is recommended that USAID/Z and the GOZ require ministries to submit a 6-12 month cash flow statement for ZASA project requirements so that LCG"s in excess of these requirements can be deposited into interest bearing accounts.