HomeBusiness DigestZim needs US$5b to revive infrastructure –– AfDB

Candid Comment: Mugabe has left corruption to thrive

According to a report released by the Africa Development Bank (AfDB) titled Infrastructure and Growth in Zimbabwe, close to US$5 billion of private investment is required for full implementation of the action plan to boost infrastructure.

However, analysts say that is a challenge because private sector investors have a negative perception of the investment climate in the country largely owing to heightened indigenisation threats. Currently Zimbabwe ranks lowly on most international business environment indices.

Economic Planning minister, Tapiwa Mashakada, (pictured) said government would continue to focus on the rehabilitation and replacement of infrastructure in 2012.  Mashakada said capital budget and innovative private sector initiatives would be used to fund the infrastructure development programmes.

“The infrastructure priorities are: energy, water and sanitation, transport, housing and construction, information, communication and technology (ICTs), science, technology and SME infrastructure,” he said.

Government aims to restore basic services and provide an efficient and reliable infrastructure network to facilitate smooth business and social operations, stimulate economic growth and socio-economic development.

Foreign investors have raised concern over whether the country will commit to Bilateral Investment Promotion and Protection Agreements (Bippas) that have been signed by government. Mashakada said his ministry was facilitating the signing of Bippas and their ratification with potential investment destinations.

The AfDB report says the dominant role of state enterprises in the provision of infrastructure services was an obstacle to an enlarged private sector presence in these areas, especially where services are heavily subsidised by the state.

Nine of the parastatals currently engaged in provision of basic infrastructure services will need to be restructured. “Continuation with the current structures will leave large areas of uncertainty for potential private investors that, in turn, will undermine their willingness to consider entry into appropriate Public Private Partnership type arrangements with state enterprises,” the AFDB report said.

The bank says that in order to lay foundations for successful mobilisation of these funds, government needs to take action on three inter-related fronts, subject all nine of the parastatals involved in infrastructure service provision to technical and financial restructuring, the details of which vary among these enterprises.

It also urges the strengthening of the role of regulatory authorities in each of the infrastructure sectors, with emphasis on increased independence of these bodies; and the creation of an appropriate legal framework for the types of public-private partnerships that will be required for the rehabilitation.

–– Staff Writer.

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