GOVERNMENT says it plans to tap into Zimbabwe's diaspora population by issuing bonds to fund the construction of hydroelectric power plants.New generation capacity from the plants is projected to help ease power shortages that have hamstrung the economy.
Zimbabwe has been battling massive power shortages due to ageing generation equipment and the growing demand for power, critical for the recovery of failing industries.
Finance Minister, Patrick Chinamasa, told a ceremony to honour foreign investors in Harare on Tuesday last week that a US$8 million diaspora bond would be floated soon for Zimbabweans in the diaspora.
Chinamasa did not give time frames.
He said Zimbabwe, which is also battling to overcome a deteriorating liquidity crisis, would be engaging the diaspora and encourage them to remit funding home to boost efforts underway to rebuild the economy following a decade of turmoil that ended in 2008.
"I am considering floating a diaspora bond and use that money for hydro power projects," Chinamasa said.
"We will start with a US$8 million bond. We will put that money in a nostro account to fund the bond when it matures," said Chinamasa.
He did not disclose interest rates or the tenure of the bond.
He said Zimbabwe must immediately address the electricity crisis if it was to compete with other African markets in attracting Foreign Direct Investment (FDI).
Three weeks ago, China Export-Import Bank signed a deal to lend US$319,5 million to finance the expansion of Zimbabwe's major hydro-power station, boosting its power supply by 300 megawatts when the project ends in five years.
The expansion of Kariba South Hydro electricity plant will cost US$355 million, with China Eximbank covering 90 percent of the cost, and the Zimbabwe Power Company responsible for 10 percent of the planned investment.
Meanwhile, Chinamasa said at least US$400 million would be required to recapitalise the central bank and bankroll the re-establishment of the interbank market.
The Interbank market has not been operational due to lack of tradable instruments on the market for collateral as well as poor funding for the central bank.
He said this funding was a priority matter that should be tackled immediately to boost diminishing foreign investor confidence on the market.
"We need to restructure the financial services sector," said Chinamasa.
"We need to consolidate the role of the Reserve Bank of Zimbabwe and to resume the interbank market. To recapitalise the RBZ we need a cool US$200 million," he said.
"To re-establish the interbank market we also need something in that region."
Chinamasa's remarks came as the country's liquidity crisis continues to worsen, with at least a billion dollars said to have been moved out of the country.
Government, which has promised to fund the recapitalisation of the RBZ, is broke and was this week talking to at least three banks and a multinational insurance firm for a US$45 million facility at five percent interest to fund bonuses for civil servants.