By Martin Kadzere
The Infrastructure Development Bank of Zimbabwe, said the ongoing re-engagement between Zimbabwe and the Western countries has boosted its capacity to raise additional capital to finance major projects
The bank, charged with spearheading Zimbabwe’s infrastructure development, has lined up multi-million projects in various sectors including transport and ICTs whose implementation has been hampered by lack of funding.
“The most critical thing that we would want to see is re-engagement and that should be positively concluded,” IDBZ chief executive Thomas Sakhala told Business Weekly in an interview. “The equity is not just from the sources within Zimbabwe.”
Zimbabwe’s new administration is rebuilding international relations with the West to open up the economy to investors following decades of isolation from the global lenders.
The bank is recapitalised to the tune of $70 million, way below this year-end target of $250 million.
“We once mentioned we had a recapitalisation strategy. We hoped we would have moved from where we are; $70 million to $250 million by end of this year. And in 10 years, we should be a billion dollars,” he said.
“We would want other institutions that used to be shareholders like Africa Development Bank and European Investment Bank to consider coming back again.
“Infrastructure agenda is something that a lot of them fully support. And new potential partners as well.
“There is no reason why Development Bank of South Africa should not have shares in IDBZ.”
Economic analysts said while the re-engagement would be a positive step to re-brand the country’s image in a global environment where meaningful development on the socio-economic front had tended to elude reclusive states, it is not sufficient to attract meaningful investment with capacity to transform the economy.
“The ability of the government to master an economic governance framework that can deliver stability on the inflation and exchange rate, among other key aspects, is key to attracting foreign capital as investors are more concerned about their ability to generate, preserve and repatriate their profits,” Brains Muchemwa, Oxlink Capital managing director told Business Weekly.
“Therefore as government re-engages the West to normalise relations, it’s equally important to come up with credible and consistent economic management policies that delivers stability and growth so as to entice global capital to flow into Zimbabwe,” he said.
In addition to targeting foreign investment, the new administration is also working on clearing its arrears to the multi-lateral financial institution to unlock new funding.
The huge debt overhang and arrears to the multi-lateral financial institutions, including the International Monetary Fund and the World Bank also made it impossible for the country to raise long term capital critical for infrastructure projects.
Zimbabwe is working on a payment plan agreed in Lima, Peru in 2015 to clear its outstanding arrears with the global lenders and has set September as the deadline to pay off, according to the Reserve Bank of Zimbabwe.
In 2016, Zimbabwe cleared its arrears to the International Monetary Fund but it is still years behind on payments to the
Zimbabwe’s infrastructure spending will expand by 980 percent this year–from $157 million last year—to $1,7 billion, Finance and Economic Planning Minister Patrick Chinamasa said recently.
According to the Africa Development Bank of Zimbabwe has an estimated infrastructure backlog of $30 billion following years of little investments. Between 2009 and 2016, the Government spent a total of $2 billion on infrastructure projects, the amount analysts say should have been spent on an annual basis.
In the absence of balance of payments support from multi-lateral financial institutions, Zimbabwe has been operating on a tight budget, with the bulk of revenue going towards paying wages, leaving it with little or virtually no money for infrastructure.