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Mr Mateus Magala

Tinashe Makichi in Victoria Falls
Zimbabwe needs to spend $2 billion on infrastructural development a year for the next 10 years and develop a national projects pipeline in order to attract investment, the African Development Bank said.

AfDB said Zimbabwe’s current infrastructural deficit is currently unsustainable and requires $14 billion for infrastructure development by 2020.

Speaking at the 5th Buy Zimbabwe Buy Local Summit in Victoria Falls yesterday, AfDB resident representative Mr Mateus Magala said Zimbabwe should put together policies that attract investment in infrastructural development at the same time channelling some Government revenue towards infrastructure.

“Government needs to spend $2 billion a year for the next 10 years to cover the infrastructural gap currently bedevilling the country. There is a huge infrastructure gap in the country and there are many ways that the country can raise the required capital only if friendly investment policies are effected,” said Mr Magala.

He said of the current requirements power infrastructure requires $1,2 million, water and sanitation require $427 million, transport infrastructure requires $218 million, ICT $475 million and irrigation $47 million yearly.

Mr Magala said the country is currently spending $800 million per year on infrastructure with the current expenditure leaving a $1,2 billion gap.

He said the current gap calls for sound investment policies to attract the required investment in the infrastructural sector.

Mr Magala said there are huge sources of funding across Africa and on the international front.

Diaspora bonds present an untapped opportunity to mobilise resources in frontier markets with a large Diaspora population (e.g. Ethiopia and Zimbabwe)

He said Sovereign Wealth Funds if well designed and implemented can be an important source of finance for resource-rich countries.

“The infrastructure gap is huge and innovation and bold approaches are required and Zimbabwe should find a way to resolve this current situation. Zimbabwe should identify game changing projects that are commercially viable that can attract the appetite of investors.

“What is required right now is the national and political will to implement policies that are not detrimental to investment because infrastructural projects require huge investments of which Zimbabwe does not have the money at the moment,” said Mr Magala.

The country also needs to promote national savings to raise a revenue pool that can be used for investment in infrastructure.

Notwithstanding fiscal challenges, the public sector remains important, both as a direct financier and as a catalyst for private investment.

It is also instrumental in addressing inefficiencies and ensuring maintenance of infrastructure assets.

Mr Magala said on a continental perspective, Africa’s infrastructure financing needs are estimated at $93 billion per annum, with a financing gap estimated at US$48 billion.

He said inadequate infrastructure was holding back Africa’s economic growth by 2 percent each year and reducing firms’ productivity by as much as 40 percent.

Around the world the gap between demand and investment in infrastructure is estimated at $1 trillion to $1,5 trillion annually.

Mr Magala said innovative finance is key to infrastructure development on that part of Zimbabwe.

Increasing tax revenues and stimulating private and public savings are crucial measures for meeting Africa’s infrastructure challenge, together with finding new and innovative financing sources.

Speaking at the same event, Chengetedzai Depository chairman Mr Zwelibanzi Ndlovu said there should be accelerated efforts to correct misconceptions around the brand Zimbabwe in terms of the investment environment.

He said it is everyone’s responsibility to market the national brand.