HomeBusiness DigestZim construction sector to grow by 4%

Zim construction sector to grow by 4%

ZIMBABWE’S infrastructure and construction industry is projected to grow at a consistent rate of 4,3% beginning this year until 2026, while the sector will remain one of the smallest in Sub-Saharan Africa (SSA), BMI Research, a Fitch think-tank, has said.

By Tinashe Kairiza

The latest growth estimates by BMI Research are in sync with projections by the Infrastructure Development Bank of Zimbabwe (IDBZ) that the southern African country invested only US$2 billion in construction projects between 2009 and 2016.

In 2009, after the formation of an inclusive government, Zimbabwe spent nothing towards infrastructure development, with investment soaring to US$200 million in 2010, US$600 million between 2011 and 2012 before dipping to US$100 million in 2013.

IDBZ further forecasts that Zimbabwe will require US$26 billion in fresh investment capital over the next decade to bridge its yawning infrastructural development deficit.

In 2012, shortly before Zimbabwe held watershed polls in 2013 that ended a coalition government, the World Bank (WB) projected Harare required a staggering US$33 billion over three decades to rehabilitate its shambolic infrastructure, as well as construct new projects.

BMI Research said the net value of Zimbabwe’s infrastructure and construction sector would nominally grow to US$800 million by 2026, with China earmarked to implement the bulk of the projects “due to large existing commitments”.

“Zimbabwe’s unfavourable business environment is likely to weigh on its construction sector growth, with the country set to remain one of the smallest construction markets in SSA through 2026. Chinese investment is likely to be the main supporter of industry growth over coming years due to large existing commitments.

“The considerable risk associated with investment in Zimbabwe informs our forecast for the nominal industry value to reach US$800 million by 2026, suggesting that the country’s construction markets will remain as one of the smallest in the world,” BMI Research said.

With Zimbabwe’s infrastructure development gap widening, the African Development Bank (AfDB) has projected that the continent loses 2% in potential growth annually, due to dwindling investment towards key construction projects.

Flat growth margins of 4,3% from 2018 to 2026 will be sustained by Chinese investment, with the Asian country already undertaking key infrastructure projects in Zimbabwe ranging from power generation to dam construction.

Currently, China International Water and Electric Corporation is constructing the Gwayi-Shangani Dam, which will have capacity to generate 6 megawatts with a holding capacity of 635 million litres once complete.

Sino-Hydro, a Chinese firm, is currently undertaking a power generation expansion project at Kariba which is expected to contribute 300MW on the national electricity grid.

BMI Research largely attributes dwindling investment towards infrastructure development due to Zimbabwe’s “risky” environment.

“Zimbabwe is ranked one of the riskiest markets globally to invest in infrastructure in our Infrastructure Risk/Reward Index, coming in 97th place out of 105 markets.

“In Sub-Saharan Africa, it comes in 16th place out of 18 markets, with its score of 29, seven out of 100, well below the regional average of 42,1,” said BMI Research.

The World Bank, which has projected Zimbabwe’s economy to grow nominally by 0,9% this year, cites political uncertainty and policy inconsistency as the key factors arresting the country’s growth potential.

Recent Posts

Stories you will enjoy

Recommended reading