Harare – TheAfrican Development Bank (AfDB) says Zimbabwe’s international arrears are one of the biggest stumbling blocks to financing of urgently needed infrastructure.
At a May 5 meeting of the Zimbabwe Economics Society which focused on infrastructure development, AfDB Zimbabwe country manager Dr Walter Omuor Odero said international development institutions were reluctant to extend money to the country because of its arrears.
Participants said the country, as such, needed to find new strategies to finance infrastructure development. Discussants at the virtual meeting included Zimbabwean Secretary for Energy Dr Gloria Magombo, Secretary for Transport and Infrastructure Development Engineer Theodius Chinyanga.
Dr Odero said, “The AfDB cannot lend the country any significant funds that are needed for infrastructure development until it the country clears the existing arrears. Countries like Sudan have recently cleared their arrears and are accessing the bank’s finances, hence it is very possible for Zimbabwe to do the same.
“As a bank we are giving the country technical support as well as grants for rehabilitation projects and other projects, however these grants are only worth US$200 million, which is not enough to cover the infrastructure gap in the country. We can do a lot more for the country if the arrears are cleared.”
Mr Willing Zvirevo of the Infrastructure Development Bank of Zimbabwe said since the country could not presently access significant financing from traditional sources, it was time to be innovative.
“We need to attract foreign capital from other countries, we need to look at what other countries are doing to attract FDI, what are the impediments to FDI and try to solve them. One challenge that we are facing as a country is that we lack bankable projects.
“Most infrastructure projects are not finalised some lake feasibility studies, environmental impact assessments and other assessments that provide adequate information to investors hence this issue needs to be addressed. The sector players need to be capacitated to produce attractive bankable projects that bring in FDI”, said Mr Zvirevo.
A proposal that came out of the discussion was blended finance, using guarantees to de-risk private investment.
“Blended financing is proving to be very successful in crowding-in private sector investment and I believe AfDB can do more in this area, given that direct funding cannot be provided due to arrears”, suggested Mr Trivington Makuve, an economist.