Zim aims at attracting investors

27 Apr, 2014 - 01:04 0 Views
Zim aims at attracting investors Cde Patrick Chinamasa

The Sunday News

Minister Chinamasa

Minister Chinamasa

Business Reporter
GOVERNMENT is working on various ways to improve its strategic infrastructure and productive sector as it forges ahead to turn around the country’s economy in spite of elusive foreign lines of credit.
Addressing delegates at the Zimbabwe International Trade Fair Business Conference last Wednesday, the Minister of Finance and Economic Development, Cde Patrick Chinamasa, said the Government was looking at a range of options aimed at attracting investors to inject funds towards the rehabilitation of the country’s infrastructure and resuscitation of its productive sector in the wake of overhanging debts from global financial institutions like the International Monetary Fund and the World Bank.

“Zimbabwe is an economy that has natural resources. And a positive strategy is to fight our debt overhang by leveraging our resources to make the most of what we have but at the moment we can’t do that because even if you go to any banker you can’t convince them to lend you money by merely telling them you have vast minerals. There is a need for a geological survey to be carried out by a reputable international consultancy and that way you can prove the minerals that you have and use that as collateral,” he said.

Cde Chinamasa said Government was engaged in a number of arrangements to improve power generation in the country since power surplus was pivotal to the growth of the economy.

“There is a huge deficit in our energy output. Unless we have power we can’t start talking about the expansion of our economy because every sector of our economy is serviced by power but we have a deficit of something like 1 200 megawatts on a depressed economy, so that again is a challenge.

“Our productive sector is collapsing and that also is a problem and we don’t have to repeat this. We don’t need an economist to tell us the state of our economy, everyone knows there are potholes; that we don’t have a functional infrastructural layout in our country,” Cde Chinamasa said.

He said the Government was using a Special Purpose Vehicle to rehabilitate the Kariba South extension hydropower station, the Batoka power station and the expansion of the Hwange Thermal Power Station whereby it had to borrow funds for constructing an asset with the hope of generating cashflow from the infrastructure and then paying back the loan.

For the proposed Gwayi Thermal Power Station, the Government entered into a joint venture whereby the investor would be paid for contributing power to the national grid and this arrangement was set aside for other independent players that have applied to set up smaller power stations including those that intend to come up with solar projects.

Cde  Chinamasa, however, said Government would have difficulties in rehabilitating most of the country’s road networks through the arrangement of paying using toll gate fees due to low volumes of traffic.

“The only road, which seems to be feasible for that purpose is the Beitbridge-Chirundu road. So we are working towards stitching together a project on the road on the basis of which the loan will be serviced by the tollgate fees. We think there are enough volumes of traffic there to service a long-term loan of 15 to 20 years so we need to borrow money in the long term at concessionary rates,” he said.

Cde Chinamasa said Government was still pursuing coming up with Diaspora bonds as one of the many efforts to finance the country’s economy.

“The Diaspora bond is very important and we are working on it and we have to start on, let’s say a figure of $10 million, which we will channel towards power generation,” he said.

The Diaspora bond is one such facility that has managed to sustain economies in distress and Israel has successfully manoeuvred this instrument to bridge-finance its economy. Due to the rise in domestic poverty, many families have been sustained by remittances from family members in the Diaspora. It is now estimated Zimbabwe received about $2bn this year alone according to Cde Patrick Chinamasa, from remittances making it the second largest contributor to Zimbabwe’s Gross Domestic Product (GDP).

The standards of living of the majority of Diasporas particularly in developed countries has significantly improved over time, which makes it worthwhile to target expatriate Diaspora communities as potential investors in capital investment projects in the form of Diaspora bonds.

Research has proven that Diaspora bonds and remittances are a vital source of unrestricted funding particularly in difficult times as has been acknowledged in Zimbabwe that remittances did help prop up the Zimbabwean economy from collapsing during its worst crisis point in 2008.

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