Budget increased by 1000 percent…Govt to prioritise feasibility studies
Zimbabwe’s infrastructure spending will expand by 980 percent this year — from $157 million last year — to $1,7 billion as Government targets key projects to help economic revival, Finance and Economic Planning Minister Patrick Chinamasa has said.
Zimbabwe has an estimated infrastructure backlog of $30 billion, according to the Africa Development Bank.
Between 2009 and 2016, the Government spent only $2 billion on infrastructure projects, the amount analysts say should have been spent on an annual basis.
The huge debt overhang and arrears to the multi-lateral financial institutions, including the International Monetary Fund and the World Bank also made it impossible for the country to raise long-term capital critical for infrastructure projects.
In the absence of balance of payments support from multi-lateral financial institutions, Zimbabwe has been operating on a tight budget, with the bulk of revenue going towards paying wages, leaving it with little or virtually no money for capital projects.
Most of the infrastructure projects implemented during the past few years were funded by the Chinese, but some of the signed deals failed to take off due to delays in debt repayment to China Export and Credit Insurance Corporation (Sinosure).
Sinosure is a State-funded insurance group spearheading China’s foreign trade and economic programmes.
Minister Chinamasa last week said the Government would give priority to infrastructure development as a catalyst of growing and developing the economy, adding sustainable economic recovery would only be achieved with robust infrastructure in place.
He said part of the money would be spent on irrigation, with the Government targeting to roll out irrigation schemes in the country’s 61 rural districts, the construction of vocational centres, housing and funding of feasibility studies of big projects.
“We have increased infrastructure spending to $1,7 billion in 2018 from $156,9 million,” said Minister Chinamasa adding “this demonstrates the value that the Government attaches to infrastructure development.” He said the Government also allocated $15 million towards the project preparations development facility to enable funding of project development cost such as feasibility study.
“Our biggest challenge is that we try to undertake very big infrastructure without feasibility studies. In some respects, there are no designs. And yet no money will flow to a project without a design, without a feasibility study,” said Minister Chinamasa.
According to a recent presentation by Infrastructural Development Bank of Zimbabwe chief executive Thomas Zondo Sakala, the African Development Bank and World Bank contend that the infrastructure gap requires investment amounting to between $1,6 billion and $2 billion annually to reduce the infrastructure deficit.
Minister Chinamasa said the Government was rolling out a new financing model for infrastructure, which includes recapitalising local development financial institutions such as IDBZ, Agribank and the Small to Medium Enterprise Development Corporation, a State institution charged with providing loans to the SMEs