Infrastructure perspective to 2016 National Budget

Phinias Tafa Infrastructure Report
Resource mobilisation and utilisation and absorption of expenditure are critical for the success of infrastructure development. (Wambui 2015). Such developments count for significant budget votes and thus create fiscal pressures. To that end, there is need to emphasise on the scope for improving quality of spending for better outcomes. (Institute of Economic Affairs, 2014)

Following years of infrastructure decay, the Government of Zimbabwe has recently made tremendous strides in infrastructure development.

This assertion finds credence in the prominence given to infrastructure by the country’s current blue-print, Zim-Asset and the 2015 State Of The nation Address 10 Point Plan.

It is now the amount of resources treasury allocates to infrastructure requirements that activates the various verbal pronouncements.

Faced with a narrow fiscal space, the Minister allocated just slightly over 7 percent of the $4 billion budget to infrastructural requirements.

It should be noted that the total requirements for 2016 as requested by infrastructure institutions stood at $2,7 billion, and the budget managed to identify sources for $1,1 billion.

Where will the money come from? $1,1 billion will come from Government funding, supported by loan and development partner funds, and public entities’ own resources as shown in below:

Thus the bulk of the funding for our infrastructure will come from loan financing.

True to this, on January 4, the Finance Minister announced that Government will soon float infrastructure bonds to mobilise capital resources.

Development partners are also expected to chip in with $64,9 million.

These two sources call for Government to strengthen its relationships with all non-state actors.

There is also need to encourage the private sector to increase investment in infrastructure.

The first step is the creation of an enabling legislation and regulations for public-private partnerships (PPP), (Chitambira, 2015).

Not all infrastructure services qualify for budget funding.

Thus cost recovery from users forms an important foundation of infrastructure sustainability.

In order to channel funding into infrastructure projects, the private sector is attracted by tariffs that are cost-reflective, effective revenue collection systems and operational efficiencies.

Apart from tapping into their own revenues earned from user-fees, state-owned entities such as ZETDC, NRZ, ZINWA, TelOne and ZINARA must also raise funds independently, backed by their own balance sheets and Government guarantees.

For example, with NRZ having raised a paltry $6 million against $1,9 billion it requires to capacitate its operations, there is need for it to engage technical partners able to bring new capital and technical ability.

Also rather than allocating land to numerous land barons and co-operatives whose background the government does not know, it can give it to the Urban Development Corporation (UDCORP).

Capacitated with a health balance sheet, UDCORP can become a competitive property developer.

Readers need to note that the $285 million to come directly from Government is lower than the $400 million the country would require under a modest infrastructure funding scenario, but significantly higher than the $100 million required under a minimalist, maintenance-only scenario.

Who will get what?

The key sectors to receive infrastructure funding are energy, transport and communication, water and sanitation, housing development, social services and agriculture as shown below.

The table depicts the allocated vote against the requested amount.

Despite transport and communication having requested the highest amount of $990 million, energy was given the largest amount of $480 million.

This was on account of power generation, transmission, distribution and rural electrification projects meant to address the major power shortages that are undermining the country’s economic activities, (Ministry of Finance, 2015).

Energy also impacts on social issues like sewage pumping and treatment stations as well as poverty reduction.

Transport and Communication was allocated $130 million.

A major aspect of this was the realisation by the Minister that despite disbursements over the years, local authorities’ road infrastructure has continued to deteriorate with very little impact being realised from the disbursed funds.

To arrest this situation, he proposed the following interventions:

Ring-fencing the resources from the centre, with each local authority identifying specific roads to be implemented in a financial year.

Drawdowns will be based on agreed programme of works for each road and based on submission of certified invoices for work done.

Setting up a robust monitoring and evaluation framework that will ensure quality, accountability and achievement of intended results.

This should see greater accountability in the allocated resources, like the $10 million from the Road Fund which was set aside for rehabilitation and maintenance of specific urban roads to easy on pot-poles and general road conditions.

Having realised the economic importance of ICT, the Minister allocated this sector 81 percent of its requisition.

This will be used to establish Data Centres, complete Mile Connectivity, establish Community Information Centres and extend E-Government Platform, among other uses.

The Cobb-Douglass production function confirms that accumulation in ICT capital has a solid causal effect on economic growth, (Vu, 2004).

Given the rapid urbanisation, Zimbabwe is on the verge of urban housing crisis.

The Ministry of Local Government estimates an annual housing deficit of 120 000 units and a backlog of 1,25 million units.

At independence, supply of affordable housing was a top priority for the Government.

However, since the beginning of the new millennium Government has failed to provide decent housing especially for the urban residents.

One is then left to wonder what contribution the $43 million allocated for housing development will have on the National Housing Delivery Programme target of delivering 313 368 fully constructed housing units or serviced stands between 2014 and 2018.

Issues for Parliament to note

a) Although the minister must be commended for specifying the projects to be undertaken like roads to be dualised, resurfaced or upgraded, dams to be constructed and power stations to be worked on, he should also have given other targets like kilometres to be upgraded from gravel to tarmac, kilometres of old paved roads to be reconstructed and rehabilitated, kilometres of paved and unpaved roads to be routinely maintained.

b) Nothing was said with regards to road equipment which can capacitate the abilities of road providers like Local Authorities (LAs) and District Development Fund (DDF).

One only needs to recall how much equipment DDF used to have back then. This compares badly with the present situation where the previously well stocked workshops are now junkyards.

Government should also detail and enforce operational procedures for equipment management in order to have longer effective years out of them.

c) Given the mushrooming of settlements, there is need to protect infrastructure reserves like road and water reserves.

Perhaps in future there will be need for Government to establish an infrastructure reserve protection unit comprising of police and LAs officials to patrol and demolish structures set up in such reserves, gazette them and install sign posts to demarcate them.

d) Public infrastructure developments are riddled with poor management resulting in delays and cost-overruns.

Infrastructure related ministries must join operations to achieve high budget execution and realisation of related economic growth. This could be done by coherent planning and procurement systems.

e) Moving away from tradition, the budget does not implicitly provide infrastructure grants for all cities serve for selected projects. This means capital investments needed by the cities must largely come from revenues generated by municipalities themselves, in partnership with the private sector.

In conclusion, the minister must be commended for proposing Community Ownership of Local Infrastructure.

Besides instilling a sense of ownership among the various communities in which the different infrastructure facilities lie, the community can police those who damage or destroy the facilities.

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