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Business Reporter

The Infrastructure Development Bank (IDBZ) says it is evaluating private sector projects worth $1 billion from the energy, mining and irrigation sectors for funding in line with the bank’s mandate of supporting infrastructure development in the country.

Established in 2005, IDBZ is a Government-owned development bank, mandated to finance key long and medium term infrastructure projects. It is governed by an Act of Parliament, the Infrastructure Development Bank of Zimbabwe Act (Chapter 24:14).

Zondo Sakala, the bank’s chief executive officer, said in a statement of financials for the year ended December 31, 2020 that during the year, the bank approved private sector projects worth $144 million.

“Applications worth more than $1 billion in respect of energy, mining and irrigation projects are being considered for funding,” he said.

He added that the bank’s infrastructure value chain loan book closed the year at $192,8 million from $93,54 million as at December 31, 2020.

According to the country’s five year development plan, the National Development Strategy (NDS1), the Government is committed to infrastructure development, supported by the private sector.

As a result, several public sector funded projects spanning various sectors such as roads, energy, mining and tourism are at different stages of implementation with the Government optimistic of achieving set targets.

The NDS1 considers energy as a key enabler to the acceleration of the country’s modernisation and industrialisation agenda as well as sustainable socio-economic growth.

IDBZ uses several instruments and/or structures to finance such as term loans, mezzanine funding, co-financing/syndication, equity participation/shareholder loans, preference shares, loan guarantees, infrastructure/project bonds/commercial paper and climate finance.

The infrastructure bank has a growing focus on the use of blended finance to de-risk projects and catalyse private sector investment through innovative funding structures.

Mr Sakala said to adequately fund projects, the bank embarked on several fundraising initiatives, which included the issuance of US dollar linked bonds and the bank managed to raise an equivalent of US$9,84 million ($877,9 million) for project implementation.

“Of this amount, $461,9 million was raised for the Sumben Phase 1 Housing Project and the Elizabeth Park Housing Project through the USD-linked Bonds and other structured instruments. $416 million was raised for the Bulawayo Students Accommodation Complex Project (BSAC),” he said.

Meanwhile, Mr Sakala noted that notwithstanding the positive macroeconomic developments during the year under review, Covid-19 restrictions slowed down project implementation resulting in changes on the completion dates for several projects.

He said this negatively affected the bank’s financial performance as revenue recognition from the affected projects was deferred to 2022.

As such, the bank’s inflation-adjusted net operating income decreased by $1,3 billion from $1,2 billion in in 2020, to negative $28,87 million in 2021 and interest income was weighed down by subdued effective interest rates.

Mr Sakala said fees and commission income was 49 percent lower than the prior year at $20 million as the Bank was negatively impacted by thin interest margins emanating from the cap placed on interest rates.

The bank’s operating expenses increased by 95 percent, driven by a 75 percent increase in personnel expenses as the Bank aimed at retaining critical staff and matching market remuneration levels.

“On the other hand, administration expenses shot up by 118 percent mainly driven by inflation and Covid-19 related expenses.

“Resultantly, during the period under review, the bank recorded a loss before tax and other comprehensive income of $945,8 million compared to a profit of $2,5 billion achieved in the same period last year,” he said.

The bank’s total assets increased by three percent from the prior year-end level of $9,2 billion to $9,5 billion as at December 31, 2021.

The Non-Performing Loans (NPL) ratio for the period closed at 0,4 percent, which was within the regulatory threshold of 5 percent as debtors gained from inflation and currency depreciation.