How to revive Zimbabwe's economy

By Martin Plaut
BBC News, Africa analyst

Zimbabwe's government has been struggling to contain hyperinflation

The deal that has now been reached between Robert Mugabe and Morgan Tsvangirai opens the way for international donors to help to revive Zimbabwe's economy.

Since the Mugabe government began seizing white-owned farms eight years ago, the country has gone into rapid decline.

It is now the fastest shrinking economy in the world.

Assuming the signing ceremony goes ahead as planned on Monday, the international community will immediately get behind Zimbabwe's attempts to revive its collapsing economy.

But the deal alone is not enough.

Fishmongers Group

Donors have been meeting for the past 18 months to discuss how to react.

What is clear is that not all whites are likely to get back their land

The meetings of what is known as the Fishmongers Group - after the restaurant in Harare where the discussions first took place - established criteria for their participation.

They are looking for two key decisions: for the new government to lift the restrictions on the distribution of aid across Zimbabwe and for the authorities to approach the World Bank and International Monetary Fund (IMF) for help to stabilise the economy.

Once this is done the donors plan to come in with a package of aid worth $1-1.5bn (£568-852m) a year. This will represent a three- or four-fold increase in the aid that Zimbabwe currently receives.

Britain - the former colonial power - plans to immediately double its aid from the current level of $90m (£51m) a year.

Breadbasket again?

Donors are optimistic that Zimbabwe could rebound rapidly.

The country's infrastructure - its roads, dams and airports - are largely sound.

The world can now try to help Zimbabwe revive its fortunes

It also has a large pool of well educated people, many of whom are expected to flood home from neighbouring South Africa, Botswana and Zambia.

In five to 10 years the country would be expected to be back on its feet.

But there will still be difficult questions to resolve.

In particular, what to do about the land seized from the white farmers.

That, say the donors, will have to be resolved by Zimbabweans themselves, although foreign finances could ease the process.

The opposition Movement for Democratic Change plans to establish a land claims commission.

What is clear is that not all whites are likely to get back their land.

At the same time the ruling party's elite - who were given a number of choice farms - will not be allowed to keep all the farms they took.

Donors believe that the key is that there is security of tenure, for only then will anyone be prepared to put money into agriculture - a sector of the economy that once made the country the breadbasket of southern Africa.