The Medium-Term Plan launched in July 2011 identified infrastructure development as one of the country’s ten national development priorities.
NewsDay Business Reporter, Victoria Mtomba (ND) spoke to IDBZ chief executive officer Charles Chikaura (CC) on infrastructure funding and other issues. Below are excerpts:
ND: What changes have occured since last year in terms of infrastructure development? CC: Through its role as advisor to the government on infrastructure development matters, the bank has been involved in the administration of loan facilities and monitoring projects sponsored by the public sector. These entities include Zimbabwe National Water Authority and cities of Harare, Bulawayo and Mutare among others (in terms of water and sewer reticulation); Zimbabwe National Road Authority, Civil Aviation Authority of Zimbabwe and National Railways of Zimbabwe (transport); Zimbabwe Power Company and Zimbabwe Electricity Transmission and Distribution Company (energy), universities under the Ministry of Higher Education and housing projects sponsored by the Ministry of National Housing and Social Amenities (housing) and Transmedia and TelOne (ICT). In this regard close to $250 million has been committed to such projects to date, 74% of which has been disbursed. This amount was shared by the energy ($40,1milllion), transport ($61 million), ICT ($9,3m), water and sewer, dams and irrigation ($53 million) and housing ($21 million).
Specific projects under this scheme include the Harare – Skyline and Harare-Norton road dualisation, rehabilitation/refurbishment of Harare International Airport and Joshua Mqabuko Nkomo Airport, rehabilitation of National Railways of Zimbabwe’s track and signalling infrastructure (transport); Mtshabezi pipeline, Wenimbi pipeline, Tokwe Mukosi Dam and Bubi Lupane Dam and water and sewer projects for local authorities (water and sewer, dams and irrigation); rehabilitation of Hwange and Kariba power plants (energy); TelOne optic fibre project and Transmedia base stations (ICT), Willowvale flats project among other housing projects.
ND: Since 2009 has the country embarked on any major infrastructure project? May you shed more light on the project? CC: The Harare–Chirundu Road and Harare Ring Road construction, improvement and tolling. The Zimbabwe government embarked on the Harare–Chirundu Road and Harare Ring Road construction, improvement and tolling project.
The process leading to this realisation is composed of four distinct and important phases; undertaking of feasibility studies, mobilisation of financial resources, construction of the road infrastructure and associated facilities and operation and maintenance of the road infrastructure and associated facilities.
The first phase was completed in September this year culminating into a feasibility study report which shall be used to develop a project information memorandum. The objectives of the studies were to investigate the technical, financial, economic and social feasibility of improving the Harare–Chirundu Road and constructing the Harare Ring Road.
ND: Why is development of infrastructure important to our economy? CC: An efficient infrastructure network can be viewed as the backbone of the productive sectors of the economy, which are key drivers of economic growth and social progress. According to this view, economic infrastructure does not exist for its own sake, but rather to support various kinds of economic activity. The provision of power makes it possible to use modern technologies and processes. By efficiently moving goods and services to where they can be used most effectively, transport adds value and spurs growth. Sound infrastructure is also a key ingredient for integration of regional and sub-regional markets for intra-African trade, and positioning of African economies in world markets.
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Investments in infrastructure can also be used as a springboard to fight poverty through investments in agriculture, health and education services. Infrastructure development is also an enormous untapped potential for the creation of productive employment. In addition, a well-developed economic and social infrastructure is an important indicator of the quality of a country’s investment climate for would-be investors, both local and foreign.
Large infrastructure gaps serve as a binding constraint to higher factor productivity and growth in low-income countries in sub-Saharan Africa. Infrastructure in the region is far less developed on average than in other low-income countries around the world, particularly in the areas of power and transportation according to the International Monetary Fund.
ND: The construction sector is expected to grow by 10% this year. Do you think this is an achievable target? CC: The performance of the construction industry has been on the decline due to shortages of key raw materials, under capitalisation, obsolete equipment, high operational costs, skills flight and the downsizing of some construction companies.
This problem has also been exacerbated by liquidity constraints, making it difficult for private sector participation. However, with the government commitment on the National Housing policy and the Public Private Partnerships and Legal Framework, the Housing Sector is poised to improve at a faster rate than the rest of the infrastructure and construction sector.
The government adopted an incremental development policy that all local authorities are encouraged to take advantage of, whereby priority is given to the most important facilities and then gradually followed by the least basic ones. Incremental development is effected on either infrastructure or housing development.
Water and sewer are put first while roads come at a later stage on infrastructure development. At the beginning those basic services are used communally and then families graduate into individualised connection when they can afford.
The government of Zimbabwe availed a $25 million facility through the IDBZ for housing projects in various local authorities from year 2010 to date.
Through these initiatives by the government and the contribution by private property developers it is reasonable to estimate a growth rate for the sector of at least 9,3% in line with gross domestic product growth rate.
ND: What should be done to improve the performance of the sector? CC: Sector policy reforms need to be addressed at a faster rate in order for the sector to achieve full potential, for instance finalising the National Housing Policy and the PPP’s framework and recapitalisation of the IDBZ so that companies may access lines of credit locally.
