ZIMBABWE has announced a massive multi-billion-dollar infrastructure plan to upgrade its power grid and fuel supply chain to curb its over-reliance on foreign energy markets.
The government currently spends a significant portion of its scarce foreign currency reserves to import petroleum products and buy supplementary electricity from regional neighbours, including Mozambique, Zambia and South Africa.
This heavy import bill has placed severe pressure on the country’s balance of payments.
Addressing regional energy executives and international financiers at the DEVAC Infrastructure Summit in Johannesburg on Thursday, Energy and Power Development minister July Moyo said the government will build strategic fuel reserves to cushion the economy against global price shocks.
“Our dependence on imported petroleum products is a structural vulnerability,” he said.
“The government is pursuing a dual strategy: building strategic fuel reserves to buffer against price shocks and supply disruptions, while simultaneously investing in domestic blending capacity to increase the share of locally produced ethanol and biodiesel in our fuel mix.”
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Zimbabwe’s policy shift follows the severe economic impact of the recent closure of the Strait of Hormuz, caused by the war between Israel and the United States against Iran.
The blockade triggered a dramatic surge in domestic fuel prices, spiked public transport costs, and heightened vulnerability across the country’s food and agricultural supply chains.
Moyo said energy shortages have severely hindered Zimbabwe’s economic growth, resulting in billions of dollars lost annually.
“Our energy deficit remains a structural constraint on growth. Load-shedding costs our economy billions of dollars annually in lost productivity.
“Businesses operate generators at enormous cost, while hospitals, schools, and water utilities strain under an unreliable supply.
“Furthermore, our manufacturing sector cannot competitively produce for export markets when the power supply is unpredictable and expensive.”
Zimbabwe’s crisis also highlights a harsh urban-rural divide.
While urban centres endure intense load-shedding, large portions of rural Zimbabwe have never been connected to the national grid, leaving poor peasant households heavily reliant on traditional wood fuel and facing immense financial strain.
According to national census data and the Zimbabwe Energy Regulatory Authority, only about 20% to 23,4% of rural households have access to grid electricity, compared to over 85% in urban areas.
To address these deficits, Moyo urged African governments to fulfil their policy responsibilities to attract global investors.
“Dialogue must always translate into delivery. Investors across the continent are ready to commit, but they demand predictability,” he said.
“Governments, therefore, have a responsibility to create the right enabling environment by ensuring transparent procurement processes, fair and timely dispute resolution, and incentives that encourage innovation and long-term investment.”