Zim-fund inadequate to meet infrastructure gap

Published: 19 November 2013

According to the African Development Bank, ZimFund, resources are limited to meet the infrastructure needs of the economy.

A study by the bank estimates Zimbabwe's infrastructure gap at a daunting $14 billion, this shows that there is the critical need to source funding for the infrastructure plan.

At the moment, the total annual expenditures required to meet Africa's infrastructure investment needs stand at approximately $ 93 billion, only $45 billion is current spent (with 66 percent corresponding to budget expenditures, 20 percent to private investment, and 12 percent to ODA); this leaves a financing gap of about $48 billion per year.

Africa is failing to meet 53 percent of the funding needed for infrastructure development. This gap is also important within the Southern African Development Community (Sadc).

According to Trade Mark Southern Africa the projects covered in the Sadc Regional Infrastructure Development Master Plan (RIDMP), has estimated capital requirements of $ 500 billion, at least $ 100 billion of this amount will have to come from private sector sources if the plan is to be successfully rolled out between 2014 and 2027. AfDB estimates infrastructure financing requirements in Africa's at about 10 percent of GDP per year until 2020.

With the above view the need to cover the infrastructure gap can never be underrated. It is critical to note that the whole economy is depended on the efficient provision of strong reliable infrastructure.

AfDB emphasized that the implications of the debt burden are significant to the financing of the infrastructure plan.

Clearing loan arrears is a binding pre-requisite for securing new IFI and bilateral donor assistance.

Thus failing to deal with the arrears problem will continue to hinder efforts by the Government to access international assistance to maintain the economic growth momentum The required investments in infrastructure are therefore about twice the current level that has been realised to date.

It is almost certain that it will be impossible to scale up investments from current financing sources alone if the demand is to be met.

New sources of financing have to be identified and developed while at the same time making greater efforts to maximize the potential of existing infrastructure financing mechanisms.
- bh24