THE African Development Bank (AfDB) has executed several projects in Zimbabwe in the past few years. This week AfDB country manager, Moono Mupotola (MM), who arrived in Zimbabwe in December, spoke to our Business Reporter Fidelity Mhlanga (FM) about the bank’s plans for the country. Below are the excerpts of the discussion:
FM: What was your first impression of Zimbabwe?
MM: Well, this was not my first time in Zimbabwe and it is more of coming back home. Zimbabwe is a beautiful country with warm people.
FM: Tell us about your plan for Zimbabwe.
MM: Our major focus as the bank is to serve Zimbabwe. Therefore, my major focus in the next two years is to successfully lead the implementation of our strategy covering the years 2021-2023, which was recently approved by our board of directors in May 2021. The strategy is focused on two pillars namely, to enhance the productive capacity and resilience of the private sector including mining and agriculture value chains and improve good governance and enhance accountability. I am glad to say that much of the strategy is aligned to the Government of Zimbabwe’s National Development Strategy 2021 – 2025.
FM: What is your assessment of Zimbabwe’s economy?
MM: The bank estimates that the Zimbabwean economy will grow by an estimated 4,2% in 2021. However, the Covid-19 pandemic may cut this figure downwards. Our analysis was on the premise of recent government efforts to stabilise the economy, especially in the monetary space with the auctioning of the exchange rate, which significantly contributed to reducing inflation rates from an average high of 622,8% in 2020 to 106,6% recorded in June 2021. Agriculture has also performed well contributing over 15% to the gross domestic product, while the mineral sector will grow by 11%, riding on the back of increased global commodity prices.
FM: Do you see any potential?
MM: The Covid-19 pandemic’s impact on the economy is challenging and will affect Zimbabwe’s growth rate. Notwithstanding, Zimbabwe’s potential lies in its natural resources: agriculture, mining and tourism. It’s important that the country adds value to its natural resources and finds a way of plugging more into regional and global value chains. The bank estimates modest economic recovery in 2021 if the government continues to take effective measures to stabilise the foreign exchange market and control excessive money creation.
FM: How much is Zimbabwe’s debt to AfDB?
MM: Zimbabwe owes the bank about US$700 million. We look forward to working with the government to find solutions to clearing not only AfDB’s arrears but those of the other International Financial Institutions and development partners.
FM: How much has AfDB channelled into the private sector?
MM: The bank’s portfolio in Zimbabwe has a total value of US$235 million and of this, US$51,4 million supports private sector initiatives including in the financial sector.
FM: Can you give us details?
MM: The portfolio consists of 22 projects with a total portfolio value of US$235 million from various AfDB funding windows. There are two southern Africa-wide projects, which Zimbabwe benefits from and these are the Post Cyclone Idai Emergency Recovery and Resilience Programme with three grants valued at valued at about US$25 million and the Kariba Dam Rehabilitation Project implemented by Zimbabwe and Zambia with two grants valued at US$ 32,60 million. In recent years, the bank has supported Zimbabwe with financial and technical assistance targeted at strengthening institutional capacity in public finance and economic management, debt management, governance, regional integration, policy dialogue, water supply and sanitation among others. The sectoral distribution of the portfolio by value is illustrated in the chart below:
FM: What more projects have been undertaken?
MM: Some of the key achievements from various bank projects to date include the Bulawayo Water and Sewerage Services Improvement Project (BWSSIP) at US$33 million. The project aims to improve municipal water supply and sanitation services contributing to the improvement of health and social wellbeing of the population of the City of Bulawayo. The newly installed Flowserve pumps have increased the pumping capacity for the City of Bulawayo from 92 mega litres (ML) per day to 145ML/day. The increased raw water capacity from the pumps coupled with the refurbished Criterion Water Treatment Works is assisting the city to meet the daily water consumption demand in all the city’s 165 suburbs and reduce incidences of water unavailability for the residents of Bulawayo. The ZimFund Emergency Power Infrastructure Rehabilitation Project Phase II (was implemented at a cost of) US$22,74 million. Project end date is December 2021. The project aims to improve the availability of electricity supply through rehabilitation of generation, transmission and distribution facilities. Under EPIRP Phase II, ZimFund financed the replacement of the Marvel Substation transformer to the tune of US$3,74 million. The 175 MVAtransformer has the capacity to supply 175 000 customers in Bulawayo and nearby towns. Under ZimFund EPIRP II (the bank) financed the replacement of two x 4MVA 33/11kV transformers (at Prince Edward Substation) with a bigger transformer. The 20 MVA transformer has a capacity to supply 20 000 customers.
FM: Tell us about the beef and leather project.
MM: The Beef And Leather Value Chain Technical Assistance Project (was implemented at a cost of) US$2 million. The project aims to catalyse economic growth in Zimbabwe and contribute to addressing the country’s fragilities and building resilience, through supporting the growth of the two sub-sectors of the beef and leather value chain, with emphasis on value addition, resulting in the creation of employment, income growth and poverty reduction for inclusive growth. Companies were assisted to exhibit at the Zimbabwe International Trade Fair (ZITF) in 2018 and 2019, Zambia International Trade Fair (ZITF) in 2019 and Windhoek Industrial and Agricultural Show in 2019, where sales of leather products, mainly shoes were done. The Bulawayo Leather Cluster is sending a batch of 1 000 school shoes monthly to Namibia. Some of the beneficiaries were capacitated at district levels in Matabeleland North and Bulawayo Provinces, to produce leather artefacts such as school shoes, sandals and belts, among others. During training, sub clusters were created in all the seven districts of Matabeleland North Province who have been linked with the main cluster in Bulawayo and a leather processor, Zambezi Tanners. These districts collect raw hides in their locality and feed into Zambezi Tanners.
FM: Is the bank working on funding new projects this year?
MM: Yes, the bank is currently processing projects to the value of US$53 million over the next two years. with 80% of the funds meant to grow the economy through support to the private sector. We are currently working on raising funds for the continuation of ZimFund. As you may be aware, the US$145 million ZimFund programme, which has been running since 2010, is coming to an end in December 2021. ZimFund, which was established in 2010 after the 2008 cholera outbreak, has Water and Sanitation and Energy Infrastructure projects developed to help the country address challenges it was facing in water supply and sanitation and energy sectors through rehabilitation of key water and sanitation and power infrastructure, especially in municipalities that were most affected.
FM: Tell us more about this.
MM: To date, 4,5 million people have benefited from improved water and sanitation services through ZimFund Water and Sanitation Project Phase I & II while at least five million benefited from rehabilitated transmission and distribution networks under ZimFund Power project phase I and II. However, inasmuch as ZimFund Phase I and II interventions have made remarkable improvements to basic services delivery to targeted vulnerable populations in Zimbabwe, there are still challenges in these sectors. There is still sewage flowing in the streets in some urban centres, unreliable power supply, shortage of clean water etc and this is evidence that more help is still required, hence the reason why we are working on raising additional resources for the next phase of ZimFund. The current ZimFund programme is generously supported by the governments and people of Australia, Denmark, Germany, Norway, Sweden, Switzerland and the United Kingdom. ZimFund is managed by the African Development Bank.
FM: Your parting words.
MM: I would like to reiterate the bank’s commitment to supporting Zimbabwe. Our private sector support will focus on making projects reach bankability, find innovative financing instruments and support development of value chains in the agriculture and mining sectors.