Zim infrastructure funding gap cause for concern

ZIMBABWE has an infrastructure development funding gap of about US$40 billion amid fears that this could deter the country’s quest to attain an upper middle-income economy by 2030.

The Second Republic, under President Mnangagwa envisages transforming Zimbabwe into an upper middle-income society status by 2030.

One of the key enablers towards unlocking the desired Vision is infrastructure development particularly in the areas of road network, housing, energy and power, as well as irrigation development.

Speaking during a Zimbabwe-Egypt Business Seminar held virtually on Monday, Zimbabwe Investment and Development Agency chief development officer, Silibaziso Chizwina, said investment and trade between the two countries has been very low.

This, she said, is further confirmed by the fact that last year ZIDA did not register any new investors from Egypt, which is Africa’s second largest economic powerhouse.

“They (Egyptian investors) may be there in Zimbabwe but not fully registered at ZIDA as investors in the country, which is something that we are trying to work on, working with the Ambassador (Egypt Ambassador to Zimbabwe Salwa Mowaf).

“In terms of where we are with regards to the requirements or the gaps that we have that potential business partners or investors coming into the country could look at, we have funding requirement for infrastructure development a gap of about US$40 billion to cater for our requirements as a country,” said Chizwina, adding that Zimbabwe’s energy gap presently stands at about 1 500MW.

Zimbabwe is presently experiencing acute power shortages that have seen domestic and industrial consumers going for long hours, outside the normal load shedding schedule without electricity.

And the power situation caused by frequent breakdowns at Hwange Thermal Power Station, has been exacerbated by the water shortages at Kariba Dam, which provides the bulk of the country’s electricity supplies.

The Zambezi River Authority, which runs the Kariba Dam, has directed the Zimbabwe Power Company to stop generating electricity from Kariba until the water levels in the dam improves, at least by January next year.

As of yesterday, ZPC indicated on its website that the country was producing 537MW with Kariba Hydropower plant whose installed capacity is 1 050MW was generating 171MW, while 366MW came from Hwange Power Station that presently has an installed capacity of 920MW.

The thermal power plant is undergoing expansion works through the addition of Units 7 and 8 with a combined output of 600MW while one of the units is expected to go on stream by month end, adding 300MW to the national grid.

As a stop gap measure, the Government has also negotiated for about 500MW with Zambia and Mozambique and the power imports are expected any time soon.

In line with the aspirations of an upper middle-income economy, the country needs about 11 000MW and this therefore calls for massive investments in power infrastructure projects taking into account the existing electricity situation.

“But also our agricultural production has fallen to about 55 percent, we need to up it; we have housing requirement covering all types of homes from the most affordable to the high and real estate development of about 1,2 million housing units.

“Our road network upgrade needs an additional 12 000 kilometres to be upgraded immediately and our health infrastructure gap, we have about US$1 billion shortfall with regards to financing the infrastructure.

“We also have an urban development potential for new cities and Special Economic Zones development of about 25 000 hectares designated and approved for development, which is worth about US$400 million.

“As ZIDA our role is to facilitate, promote and locate and innovate with regards to investment into the country,” Chizwina said.

She highlighted that Zimbabwe has vast Foreign Direct Investment (FDI) opportunities in the above sectors including agriculture, mining and manufacturing.

The major contributors to Zimbabwe’s Gross Domestic Product are agriculture that accounts for 11 percent, mining (nine percent), tourism (12 percent), manufacturing sector (eight percent), and services sector (16 percent).

In separate interviews, economic analysts said the envisaged upper middle income economy status by 2030 could be dented by lack of infrastructural development due to limited resources to fund various projects.

“Although, we are seeing significant efforts by the Second Republic to address issues of infrastructure development in areas such as energy and road network, meeting the required funding to support several infrastructure projects across the country could be a daunting task and may scuttle the Vision 2030 milestone.

“It is thus important for the Government to aggressively scout for FDI in infrastructure development projects under a Public-Private Partnership (PPPs) arrangement,” said Wendy Mpofu.

In the past four years, on account of limited FDI inflows, the Government has largely been dependent on internal resources to fund infrastructure projects and significant milestones have been achieved.

Furthermore, the Second Republic has also been able to develop some of the major infrastructure projects like the US$1,5 billion Hwange Thermal Power Station expansion project through support from the Chinese Government.

“Taking into account the limited FDI inflows that the country is receiving or has received in the last four years, one may conclude that the US$40 billion that Zimbabwe requires to cover the infrastructure development funding gap may not be raised between now and 2030.

“As a result, the attainment of the ambitious upper middle income society by 2030 could not be achieved if issues of infrastructure particularly in energy, housing, and industry retooling are not addressed,” said another economist, Chipo Warikandwa.

Meanwhile, it emerged during the Zimbabwe – Egypt Business virtual seminar that the trade balance between the two countries was insignificant at US$44 million last year.

Zimbabwe’s exports to Egypt were US$20,4 million while imports from Egypt were US$24 million and thus it was imperative for the two sister countries to leverage on their strong and cordial political relations to boost trade and investment.-ebusinessweekly