10 July 2014

Zimbabwe: Govt Projects Grounded As Zim-Asset Fails

GOVERNMENT's plans to develop infrastructure through the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset) have crumbled. External funding sources for the blue print have proved elusive, while inflows into the fiscus have been dwindling. Infrastructure development was among the cornerstones of the blueprint which was implemented last year, with government expecting that investment into large projects would have a positive cascading effect on the economy.

Downstream industries benefit through supplying materials to construction companies. At the same time, the massive projects earmarked for construction and completion, such as dams and hospitals, were expected to help improve the quality of people's lives and reignite an economic turnaround.

"In order for the Zimbabwean economy to register growth in a manner that is both competitive and effective, there is need for the country to undertake work in critical areas such as the development of a robust, elaborate and resilient infrastructure," Zim-Asset says. However, the US$27 billion required for funding Zim-Asset projects has not been found, and economists said it would take longer for government to achieve its goals.

"As long as no external funding comes through, the projects will remain a pipedream," said Jackson Sibanda, chief executive officer at Eland Capital. "The challenge facing Zimbabwe is its credit ratings, and as long as the huge debt overhang is not reduced or cleared, lenders will not release funding. At the same time, the Ministry of Finance is trying to balance be little revenues flowing into Treasury between paying for social service delivery, such as food and medicine, and running government operations," he said.

"There is very little in terms of government revenues that can be channelled towards the development of infrastructure at the moment. We expect infrastructure projects to take long to complete," he said. The Financial Gazette's Companies & Markets reported that government appeared to be headed for a substantial budget deficit this year, after a Treasury report revealed a US$68 million financing deficit during the first quarter of this year, exposing how an ongoing economic crisis has started hitting on State revenues.

Government is battling to complete a number of key public infrastructure projects that have been outstanding for many years. Many of the incomplete but major projects are now beginning to crumble as lack of funding continues to dog the cash-strapped administration. Zimbabwe requires over US$14 billion to rehabilitate, maintain and repair its ageing infrastructure that has been deteriorating for over 30 years.

Despite failure to complete projects mooted years back, government had added many more new projects into its pipeline. Many blame mismanagement and diminishing revenue inflows into the fiscus for the lengthy period it has taken to complete key projects. Across the country, buildings, roads, railways, housing projects, major bridges, dams and scores of many projects have been grounded.

And millions of people who were earmarked to benefit from the public infrastructure have seen their quality of lives deteriorate as focus has shifted from capital projects to consumptive funding. This has been draining the bulk of State revenues. About 70 percent of the US$4 billion 2014 National Budget, for instance, would be gobbled by civil service salaries, leaving very little towards capital projects.

Among the outstanding public buildings that have taken long to complete is the new registrar general's headquarters in Harare. Scores of office blocks and housing projects have also been grounded across the country. Delayed completion has not only triggered added hardships to the country's citizens who are failing to access services. It has had serious ripple effects on the growth of several economic sectors such as construction, which heavily depends on State projects.

Other key outstanding projects include;

Tokwe- Murkosi dam in Masvingo

Gwayi-Tshangani Dam in Matebeleland

Mutange Dam in Midlands

Mtshabezi Pipeline in Matebeleland South

Wenimbi Pipeline in Mashonaland East

Marovanyati dam in Manicaland Province.

Ads by Google

Copyright © 2014 Financial Gazette. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.