PRIVATE capital is ready to fund Zimbabwe’s independent power producers (IPPs), but investors require policy certainty, credible offtake arrangements and commercially viable project structures before committing long-term funds.
That was the message from Old Mutual Zimbabwe group chief executive Sam Matsekete during a panel discussion at the Sadc Energy Week underway in Victoria Falls.
With Zimbabwe and the wider southern Africa region grappling with persistent electricity deficits, policymakers are under pressure to attract private investment to power generation. However, financiers say unlocking meaningful capital flows depends less on liquidity availability and more on improving project bankability, risk allocation and regulatory predictability.
Matsekete said the region’s energy deficit presented a clear investment opportunity, but capital deployment remained constrained by structural weaknesses in project design and domestic savings mobilisation.
“There are various issues that affect the extent to which we as financiers avail long-term and therefore patient money and then aggregate it so that it can actually be scalable and support scalable projects — we still have areas that need to improve in that space,” he said, emphasising that demand for energy finance far exceeded supply.
“You will then find that the other end, which is the demand for the finance, is clear — it is higher than supply. So what looks sometimes as hesitation is actually reflecting a need to promote more long-term savings and therefore avail scale in the actual aggregation of the funds.”
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For institutional investors such as pension funds and insurers, energy infrastructure can be an attractive asset class. However, Matsekete said fiduciary obligations required disciplined risk assessment.
“These are institutional and investment funds that are looking for return,” he said.
“The one thing that you would always look at is the profile of the risk of the projects — you are looking at the returns themselves.”
While energy projects deliver clear social impact and respond to public demand, many IPPs struggle to meet commercial thresholds.
“What we have tended to see is that energy projects are very clear in terms of the social impacts, the public demand and the utility value of the energy that we are trying to generate,” he said.
“Often, they lack commercial viability as well as the way that the projects are de-risked to attract private sector money.”
According to Matsekete, bankability hinges on predictable revenue streams, enforceable power purchase agreements, policy stability and credible counterparties.
He cited a regional example to demonstrate how appropriate structuring can unlock capital at scale — a green bond issued by Copperbelt Energy Corporation in Zambia.
The company initially sought to raise US$150 million, but exceeded its target due to strong investor demand.
The bond attracted pension funds and institutional investors, primarily from markets with deeper long-term savings pools.
The transaction succeeded, Matsekete noted, because it addressed key risk variables.
“It was issued as a green bond, the government protected or de-risked the project from certain potential policy changes, offered a tax incentive — 15% with certain taxes removed — but more than that, you will also see that the offtake is very clear,” he said.
In this case, mining companies provided firm demand.
“These are mines — private sector — so you are taking risk ultimately on an asset that will generate cash flows you are clear about,” he said.
The lesson for Zimbabwe and the wider southern Africa region, Matsekete added, is that project structuring and policy consistency are as important as capital availability.
“How much do we actually ensure the conditions to de-risk the projects, but also the conditions to ensure that the source of the money flows back to the investor are clear?” he asked.
Matsekete also highlighted a policy tension that often complicates IPP development: balancing universal energy access with investor return.
“We want to serve communities and make energy accessible to communities, which is a very legitimate need and requirement we all ought to address,” he said.
“But we also want to make sure that the way we do it makes sense in terms of capital holders seeking return.”
He warned that an excessive focus on affordability without ensuring project bankability can slow generation expansion.
“If we are not careful, we will forget that primarily we need more energy to be available before we talk about how we are using the energy,” he said.
Matsekete urged policymakers to facilitate direct transactions where commercially viable demand already exists.
“If there’s a commercial customer prepared to pay commercial rates and there’s capital prepared to invest and access those rates, how do we facilitate in between the meeting of the supply of capital to access that direct customer?” he said.