The Infrastructure Development Bank of Zimbabwe (IDBZ), a government-controlled development finance institution (DFI), says the country needs about $20 billion to fix and modernise its infrastructure with $12 billion of this going into maintenance only.
But its balance sheet cannot bear the burden of the country’s infrastructure spending at the moment and cannot raise the money from international capital markets owing to US sanctions.
In an exclusive interview, IDBZ CEO Charles Chikaura said the country’s energy, transport, water and sanitation, and information and communication technology sectors would need at least $4 billion, $2,8 billion, $3 billion and $488 million, respectively — about $10 billion in aggregate — in the next three years.
He added the DFI was looking forward to the revival of a local bond market to start raising funds to finance the country’s growing stock of infrastructure projects.
“As the economy stabilises, the bank will take advantage of the emergence of a vibrant capital market to raise suitable long-term funding for the construction sector,” Chikaura said.
Technically, as a non-deposit-taking institution, the DFI relies solely on shareholder funds and borrowings from capital markets, particularly bond markets.
The collapse of the bond market – the most important capital market for a DFI – has deprived the economy of long- term capital required to fund grand construction projects.
Chikaura said emergency investment areas for the country include water, sanitation, power, transport and ICT and private infrastructure projects, which together require an estimated $376 million.
He further said it would cost the country about $8 billion to grow its infrastructure and plug the backlog created by the “lost decade”.
The infrastructure backlog has increased year-on-year as government budgetary commitments to public infrastructure and social services through the Public Sector Investment Programme declined due to a worsening economic decline.
The severest decay has occurred in power and road and rail infrastructure, which cannot meet more than 50% of national demand at the moment.