IDBZ to carry out feasibility studies
The Infrastructure Development Bank of Zimbabwe plans to carry out feasibility studies on various key infrastructure projects across the economy to enhance uptake by potential investors, IDBZ head of resource mobilisation Willing Zvirevo has said. Last year, the bank established a fund aimed at developing early preparation stages of infrastructure projects from concept to bank ability.
The IDBZ said the $5 million Project Preparation Development Fund, as it is known, was in response to the need to fund early stages of project preparation and development funding gap, which from empirical evidence, has been the major bottleneck to attracting major investments. Some of the projects that the bank is targeting include the upgrade of Bulawayo-Chiredzi and Harare-Nyamapanda highways as well as rehabilitation of Victoria Falls Bridge.
Government also allocated $15 million that would go towards funding feasibility studies on priority projects. Mr Zvirevo said such preparation would help the Government to make informed evaluations on bids that would have been made for projects. The Government appointed the IDBZ as its lead financial advisor on key infrastructure projects.
“The studies will enable us to adequately package the project before it is taken to investors,” said Mr Zvirevo. “With fully prepared projects, we will have funding estimates and also know if the revenues to be generated would be adequate to pay back the loans.
“Our analysis of the bids will also be informed by the results of the feasibility studies. This will help us to attract investors and probably get the best deals since we would have an idea of what needs to be done and an estimate of the required funding.”
Analysts say Zimbabwe could be paying huge premiums for infrastructure projects due to poor contract negotiating capacity in light of limitations to conduct prior feasibility studies.
Zimbabwe is largely using Engineering, Procurement, Construction model to finance infrastructure projects, but critics believe most of the deals are coming at a “very huge” cost as the country cannot adequately fund feasibility studies of its projects.
Last year, Finance and Economic Planning Minister Patrick Chinamasa, said most strategic projects in the Zim-Asset have failed to attract investors due to lack of evidence on their bankability. He said due to lack of the evidence, there was a low uptake.
Minister Chinamasa said a large number of projects in Zim-Asset Strategic Plan did not have feasibility studies, and hence, provide very little information for Government and potential private sector investors to make sound investment decisions.
Eligible projects to be considered for funding through the IDBZ’s PPDF facility are those falling under the sectors such as energy, transport, water and sanitation, housing, information communication technology and tourism. The fund will also cater for economically viable development projects including those under the Community Share Owner Trusts.