The perceived country risk impacted negatively on the appetite of the private sector to invest as well as decreased donor engagement owing to outstanding arrears
By Dr Eddie Mahembe
Today’s article is a continuation of the previous six articles in the Zimbabwe Digital Express on the call for Zimbabwe to consider establishing the Public-Private-Community Partnership (PPCP) model as a panacea for building unity, improve access to quality infrastructure, and addressing development challenges such as unemployment, low economic growth, poverty, and inequality.
As we have argued in this series, infrastructure also helps promote economic linkages, foster competitiveness and trade, reduces the cost of doing business, promotes the development of private sector, allows for access to markets and is a key enabler of regional integration.
Cognizant of the critical importance of infrastructure in leveraging growth and poverty reduction, the Zimbabwe Economics Society (ZES) hosted a virtual monthly meeting on the 4th of May 2021, to discuss the main findings of the ‘Zimbabwe Infrastructure Report of 2019’ published by the African Development Bank (AfDB).
The main speaker was the AfDB Country Manager, who was responsible for the coordination and production of the 2019 Report.
Discussants were drawn from the Ministry of Transport and Infrastructure Development; Ministry of Energy and Power Development, and the Infrastructure Development Bank of Zimbabwe (IDBZ).
In this article, I would want to summarise some of the main discussion points raised in the said meeting, as per the Concept Note produced by the ZES Council prior to the meeting.
The main aim of this article is to highlight the challenges and quantify the cost of infrastructure delivery in Zimbabwe.
Cost of Infrastructure in Zimbabwe
In January 2010, the Government of National Unity (GNU) requested the AfDB to assist with a comprehensive report on the state of infrastructure in Zimbabwe.
The flagship report of 2011 entitled “Infrastructure and Growth in Zimbabwe” focused on economic infrastructure, ‘the economy’s capital stock that produces services to facilitate economic production or serves as inputs to production process.’
Following the political transition of November 2017, the new Government requested the AfDB to update the 2011 Report.
As was the case with the 2011 Report, the main objective of the update study was to provide the Government with a masterplan for the rehabilitation of infrastructure assets and recovery of infrastructure services in the context of Vision 2030.
It was also a strategy to promote international re-engagement in the area of infrastructure in the event that Government went ahead with arrears clearance in 2019.
Lastly, the 2019 Report lays out an action plan for infrastructure by 2030, focusing on four sectors, namely: transport, energy, water and sanitation, and ICT.
As with the 2011 Report, the 2019 Report found that sustained deterioration in the quality of infrastructure assets is associated with very inadequate levels of public expenditures for routine and periodic maintenance of the infrastructure networks.
Where the services are provided by parastatals, prices have been kept low such that the economic costs of the deterioration are reflected in huge and often unsustainable operating losses.
The deterioration in the physical infrastructure is accompanied by a lack of progress in building institutional capacities for management and regulation of the basic services.
This is attributed to the disjointed approach to regulation and oversight among the responsible ministries, exacerbated by the brain drain.
The deterioration in the country’s infrastructure had a marked impact on the productive sectors and on the level and quality of services.
On the other hand, the perceived country risk impacted negatively on the appetite of the private sector to invest as well as decreased donor engagement owing to outstanding arrears.
The 2019 Report proposed an ambitious plan of action for infrastructure in the next decade, that seeks to rehabilitate and upgrade the country’s basic infrastructure assets.
The total cost of the capital programme for the next decade is projected at US$33.779 billion at 2017 constant prices.
This includes US$8 billion of private investment to upgrade the existing infrastructure and new capacity; US$3.67 billion for water, sanitation and resource management; US$1.14 billion for the power programme; US$28.56 billion for the transport sector, most of which is earmarked for the road network; and US$412 million for the communications sector, mainly to create a national fibre optic backbone network.
The proposed funding arrangement is such that state enterprises involved in the provision of services in these sectors would contribute US$1.5 billion (4%), the private sector US$7.9 billion (23%), the national government and local authorities US$20.7 billion (61%), and donors the balance of US$3.7 billion (11%).
The next article will argue for the involvement of citizens as one of the sources of capital for infrastructure development.
Dr Eddie Mahembe is an Interim Chairperson of the Zimbabweans United for Progress (ZUFP). He holds a PhD in (Development) Economics, MCom in Economics, BCom Honours in Econometrics and BSc. Honours in Economics. He can be reached on Email (email@example.com) or WhatsApp (+27 60 532 8754).
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