Denmark announced a 110 million kroner grant to Zimbabwe for water, energy and infrastructure rehabilitation on Monday.
The money will go into the Zimbabwe Multi Donor Trust Fund (Zim-Fund), which is managed by the African Development Bank (AfDB) and currently holds almost 800 million kroner in contributions from seven European countries.
Denmark is the biggest contributor so far with 182 million.
The projects under the fund are already ongoing, according to African Development Bank representative Mateus Magala.
At the signing ceremony in the capital city of Harare, he said that 2.5 million people would benefit from the safe water and better power supplies that the completion of the first project would bring in 2016.
The fund also represents Denmark’s willingness to soften its position on Zimbabwe and normalise the relationship between the countries.
“Zim-Fund is yet another sign that Denmark is back in Zimbabwe,” Erik Brogger Rasmussen, the Danish chargé d'affaires to Zimbabwe, said at the signing.
“We ran away at some point because we were very unhappy with what happened with the land reform.”
State remains troubled
Denmark had reduced its contact with Zimbabwe during the southern African country's controversial forced land redistribution around the turn of the century.
In 2002, the EU imposed sanctions on Zimbabwe after alleged electoral violence and human rights violations by President Mugabe’s government.
Zimbabwe is entering its 35th year of despotic rule by Mugabe, and with six banks having recently gone under and another eleven hanging by a thread, experts predict that his government will run out of cash by August.