Zim needs $34bn for infrastructure upgrade

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Zimbabwe will need as much as US$43 billion in the next decade to revamp infrastructure to achieve sustainable levels of economic growth, according to the African Development Bank.

The water supply and sanitation and resource management would require an outlay of US$3,7 billion while the energy programme needs US$1,14 billion, AfDB said in its Zimbabwe Infrastructure Report 2019.

The report was launched in Harare yesterday

The huge chunk of approximately US$28,6 billion would go towards transport, which mainly is required for roads while the communications sector needs US$412 million.

“The proposed programme is therefore expected to provide an important stimulus for economic growth in Zimbabwe in the decade ahead,” said the AfDB report.

Constrained by a tight budget, the Government spent only $2 billion on capital projects between 2009 and 2016, the amount analysts say should have been invested annually.

The huge debt overhang and arrears to the multi-lateral financial institutions, including the International Monetary Fund and the World Bank, also made it difficult for the country to raise long term capital critical for infrastructure projects.

In the absence of significant lines of credit from multi-lateral financial institutions, Zimbabwe has been operating on a tight budget, with the bulk of revenue going towards wages, leaving it with little or virtually no funds for infrastructure.

AfDB said capital injection of US$1,5 billion would come from state enterprises involved in service provision, private sector investments would account for US$7,9 billion while Government and local authorities would contribute US$20,7 billion.

Foreign donors will provide the balance $3,7 billion.

“Assuming an arrears clearance process is initiated in the near future, and full donor support is restored, the proposed infrastructure programme would require a majority of the donor funds to be allocated to water and roads.

“Deterioration across all major infrastructure services in the country has been marked over the past decade, reflecting poor maintenance and limited new investment in key infrastructure such as power and transport services,” said AfDB.

The country is eyeing upper middle income status by 2030 and last week, the World Bank upgraded Zimbabwe to a lower middle income economy from low income ranking.

As such, an adequate supply of infrastructure services is an essential ingredient for productivity and sustained growth. Poor economic infrastructure contributes to high production costs, raising unit production costs while making the country uncompetitive.

Countries, such as Singapore, China, and India that have achieved sustainable growth have managed a significant increase in the levels of both domestic and foreign investment as a percentage of gross domestic product.

Conversely, restricted or expensive access to finance is a major constraint on such investment, particularly for small and medium-sized enterprises and for the informal sector.

Highlights

Water — US$3,7 billion
Energy — US$1,14 billion
Transport — US$28,6 billion
Communications — US$412 million
The African Development Bank
Was established to promote economic and social development efforts on the continent. The continental Bank (AfDB) Group comprises three entities: the African Development Bank (AfDB) which is the parent institution, created following an agreement signed by 23 founding member states on August 14, 1963 in Khartoum,

Sudan. This became effective on September 10, 1964.

The group includes two concessionary windows — the African Development Fund (ADF), established on November 29, 1972 by the African Development Bank and 13 non-African

countries; and the Nigeria Trust Fund (NTF), set up in 1976 by the Federal Government of Nigeria.

The inaugural meeting of the Board of Governors of the Bank was held from November 4 to 7, 1964 in Lagos, Nigeria, and the headquarters was opened in Abidjan, Côte d’Ivoire, in March 1965. The Bank’s operations commenced on July 1, 1966.

From February 2003, the Bank operated from its Temporary Relocation Agency (TRA) in Tunis, Tunisia, due to the prevailing political conflict in Côte d’Ivoire at the time until late 2013 when it commenced the return to its headquarters in Abidjan. In June 2015, over 1 500 staff had returned to headquarters out of the more than 1 900 total staff complement in the Bank.

Membership
Membership of the AfDB Group at the end of May 2015, comprised 54 African countries and 26 non-African countries.

To become an AfDB member, non-regional countries must first be ADF members.–ebusinessweekly.co.zw

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