27 February 2018

Zimbabwe: Little Progress On Harare's $100m Infrastructure Bond

The Harare City Council says there has been little progress on plans to float a $100 million infrastructure bond with bias towards housing projects.

The multimillion dollar infrastructure bond would be issued either on the Zimbabwe Stock Exchange's debt market or through private players.

Harare City Mayor, Councillor Bernard Manyenyeni told The Herald Property Guide in an interview yesterday that there had not been much traction on plans to issue the bond, although the plans were still on.

"There has not been much traction since the last time we spoke," he said.

The funds would help resolve Zimbabwe's huge appetite for housing.

Zimbabwe requires huge investment into development of housing stands, with official statistics showing the backlog stands at 1,25 million units.

Cllr Manyenyeni could not further give details on what had held up the plans saying the point man for the initiative was currently out of office.

The Harare Mayor last year said that plans were afoot to issue the multi-million dollar bond to finance infrastructure, especially housing.

He said then that discussions had already been commenced with the Ministry of Local Government, Public Works and National Housing.

"Harare is in need of major investments in terms of infrastructure and actually requires in excess of $100 million. But we need to test the market's capacity."

According to Cllr Manyenyeni the bulk of the funds would go towards housing, not only because there is a long waiting list, but there is revenue assurance and the security required to repay the funds.

It was expected the Ministry of Local Government, Public Works and National Housing would seek prescribed asset status for the infrastructure bond to make it appealing to pension funds and insurers.

While public and private projects have been successful in terms of delivering housing, the cost remains beyond the reach of many low income earners.

Access to land remains the biggest challenges, which sees developers charging way beyond what many can afford, when the secured.

Developers normally prescribe terms and conditions low income earners find difficult to honour, including instalments and initial deposit.

Limited access to reasonably priced external lines of credit by banks means the majority of the home seekers cannot afford high interest loans, structured from short term deposits) charged on mortgage loans.

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