Zimbabwe needs at least US$30 billion — an amount at least twice more than its GDP — to revamp its aging and dilapidated infrastructure.
According to a document titled Key Principles of Joint Venture Bill, presented by the Deputy Director Public Sector Investment Programme Marcos Nyaruwaya in the Ministry of Finance during a public hearing in Gweru last week, an estimate of over US$30 billion is needed to implement key critical infrastructure projects in the country.
“ZimAsset identifies critical infrastructure projects, estimated to cost over US$30 billion, to be implemented over the plan period in order to achieve the targeted 7,3 % average economic growth. The plan, however, recognises the limitations of mobilising pulic sector funding in support of projects and proposes investment vehicles such as joint ventures to leverage on private sector support,” the document says.
The Joint Venture Bill has been crafted to promote long-term economic growth in the provision of quality public infrastructure services that promote private sector competition, open new markets and opportunities for citizens to participate in the economic activities of their choice.
Authorities came up with the bill based on the guidelines of the 2004 Public Private Partnerships Policy to implement joint ventures between government and private sector.
Energy, transport, ICT, water and sanitation, among other key sectors, have been identified as key clusters by government in economic blueprint.
Group Five, a south African civil engineering company, successfully entered into private-public-partnership for the construction of the Plumtree-Harare highway and the setting up of state of the art toll gates.
The Joint Venture Bill has been taken for public debate and will soon be tabled in parliament for hearing. If passed, it will be administered under the Ministry of Finance.
The proposed law is running concurrently with Public Debt Management which has already been tabled in parliament for its first hearing. The Public Debt Management Bill seeks to limit and control government borrowings on both public and international funds. The bill is now awaiting its second hearing.
The Public Debt Management Bill is aligned to the joint Venture Bill and seeks to strengthen joint ventures which are in line with PPP. The unveiling of these two bills comes after big investment projects in the country are yet to take-off as foreign investors remain sceptical.
Government in 2011 signed a joint venture deal with Essar Africa to resuscitate Zisco in a deal worth US$750 million.
Government had a 36% equity stake and Essar 54% in the joint venture.
Nyaruwaya said in an interview during the public hearings in Gweru last week that the Essar deal has so far failed to take-off because of the initial lack of consultations among ministries and failure to do feasibility studies.
He said that the Joint Venture Bill would however be based on consultation among stakeholders.
“The Essar deal failed to take-off because there was no full consultation and feasibility study with other ministries which is cabinet and stakeholders. The Joint Venture Bill will protect such deals which involves private sector and government and the will be brought before cabinet,” Nyaruwaya said.
“It is meant to bring investor confidence, with an aim of creating a long-term sustainable infrastructure development to promote economic growth.”
However, the bill is silent on the indigenisation and economic empowerment act.
Cornilious Deredza, a debt expert in the Debt Management Office under the Ministry of Finance and Economic Development, said that if the public debt management bill is passed, it would help the country’s economy given that it was aligned to the Joint Venture bill.
“The Public Debt Management Bill is meant to set limits on government borrowings and expenditures both locally and internationally; it also carries exchange rate risks with other countries and besides it helps government when signing deals with the private sector whether local or international,” said Deredza.
The Essar deal was facilitated by former Minister of Industry and Commerce Welshman Ncube during the Government of National Unity. It hit a brick wall at the Ministry of Mines when Obert Mpofu, the then minister, clashed with Ncube on the feasibility study and evaluations of the iron ore reserves.