The African Development Bank (AfDB) this week said it will be injecting US$53 million to fund Zimbabwe’s private sector in the coming two years.
Only last month, the International Monetary Fund released US$961 million to help Zimbabwe overcome Covid-19 pandemic-related fragilities, with part of this package set to be channelled into revolving facilities for companies.
In addition, the manufacturing sector injected US$24,5 million during the first quarter in fresh recapitalisation efforts, while through US$1,7 billion raised through the forex auction system, US$325 million was used for recapitalisaiton. For an economy that has battled isolation for two decades, these figures may seem small, but surely, the effects of these injections will begin to be felt. Independent statistics are already pointing to rapid growth, with capacity utilisation expected to reach 61% this year, the highest level in a decade after reaching 57% in 2011. However, authorities are ignoring the red flags ahead.
In the past few weeks, the power crisis has returned to haunt the nation, with cities struggling under heavy blackouts during working hours. Mines have been grounded and crucial targets are under threat as production falls. Many companies have reverted to expensive diesel-powered generators to run machinery, with heavy implications on profitability, which determines firms’ hiring trends.
It has become clear that existing power stations, even after factoring in fresh capacity being created through refurbishing existing facilities, will struggle to provide sufficient power beyond 2023, when mines will increase output over five-fold, while agriculture, manufacturing and other sectors are expected to increase production.
The Confederation of Zimbabwe Industries has already warned that it sees demand outstripping supply soon, in the absence of fresh generation capacity, possibly from big facilities like the long awaited Batoka hydroelectric power station on the Zambezi.
What Zimbabwe is seeing for now, is the result of 41 years of poor planning, in which politicians slept behind the wheel and forgot that colonial era power facilities would soon age and struggle to electrify a bigger population and expanding industries as it was clear that Africa was integrating and multinationals would be roaming the region to set up power guzzling industries. Progressive governments like South Africa and Zambia were quick to realise this. They have either been constructing new power stations, or encouraging the private sector to establish new facilities. A worrying factor in Zimbabwe is that prolonged phases of deadly blackouts have failed to jolt authorities into taking real action, apart from refurbishing existing power plants. However, the impending crisis is real, and Zimbabwe must watch out.
Perhaps it is time to make a few crucial decisions, such as revamping investment policies to encourage big investors.
Authorities must take time to understand why small-scale independent power producers have been dragging their feet in setting up operations after getting their licenses. They must then return to the drawing board and refine policies, well in time before blackouts spiral out of control. Otherwise, the much-hyped Vision 2030 will remain a pipedream in the absence of a stable electricity supply.