Red flag raised over $45m Mbare Musika deal
Harare City Council financial and investment advisors have warned the city against proceeding with the $45 million Mbare Musika project because of the lack of a properly defined project concept. Harare had approved a partnership deal with Olshevick Investments, a property development firm, to upgrade Mbare Musika.A shopping mall, bus rank, a hotel and a parkade were earmarked for construction under the project. The city engaged the Infrastructure Development Bank of Zimbabwe (IDBZ) to undertake a financial and investment analysis of the project and the bank said there was need for pre- feasibility studies before the city engaged a partner.
According to recent minutes of the Business Committee, acting town clerk Mrs Josephine Ncube told council that the proposals were forwarded to the bank and after all the analysis, the bank observed that:
“The city had erred when it involved external parties without a clear project concept and the requisite feasibility studies. A proper and appropriate business model for Mbare/Musika would be financially viable and sustainable and that there would be no need for additional land to subsidise the project.
“The acting town clerk reported that the preparation of a proper project concept and pre-feasibility studies was currently in progress and was expected to be complete by November 21, 2016. The feasibility studies would culminate in the production of bankable project proposals which would be ready by December 2016 for tender process,” read the minutes.
She told council that the tender would be expected to be awarded by late January 2017 and February 2017. The committee noted with concern the time being taken to finalise the matter and it was the committee’s view that representations of Olshevik be invited to make a presentation to the committee on their proposal .
The committee also requested for the responses from IDBZ regarding the project and resolved that Olshevic representatives be invited to the next meeting of this committee to make presentations on their proposals to develop Mbare Musika Bus Termini, market and shopping mall.
In the deal, Olshevik was supposed to inject at least US$45 million and would get returns over a 20-year period after which the investment becomes the property of the council.