Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya, yesterday said the apex bank will continue to support water infrastructure development in the country to mitigate the effects of draught and increase production in the agriculture sector.
This development comes at a time when the country is moving towards building of more water infrastructure to increase productivity on farms and eliminate the over-dependence on rain-fed agriculture, which can easily be affected by El Nino and La Nina effects.
Speaking at Water Resources Infrastructure Investment Conference yesterday, Dr Mangudya said the country's agriculture system is dependent on the availability of water hence the need to invest in water infrastructure.
"Drought induced effects have significant implications on maintenance of price and financial stability in the economy and hence the central bank interest in financing of the water infrastructure development.
"Despite the shortages of foreign currency to meet the growing demand of the economy, RBZ has been able to make foreign exchange allocation for the construction of Tugwi Mukosi Dam, Gwai Shangani Dam, Beitbridge Water System, Causeway Dam and Kunzvi Dam," said Dr Mangudya.
He said financing big water infrastructure projects through this manner is, however, not ideal as it tends to prolong the completion of projects like Tugwi Mukosi, which took more than 10 years.
Dr Mangudya highlighted that instruments for water infrastructure financing include bonds, loans and equity.
He said: "On bonds we will be talking about municipal and project bonds, on loans there will be direct or co-investment lending to infrastructure, World Bank, ADB,EIB and project, syndicated project loans while on equity there is direct or co-investment infrastructure project equity, public private partnerships, concessions, BOOT and BOT."
Zimbabwe is a diversified economy, with agriculture being the major anchor of the economy.
Agriculture determines the potential growth of the economy and the sector accounts for 50 percent of employment in the country.
The sector contributes 11 percent of the Gross Domestic Product and accounts 25 percent of the country's total exports.
Tobacco is the country's highest foreign currency earner.
However, if the water infrastructure is expanded to irrigate about 350 000 hectares of land its contribution will be even higher.
The even distribution of rainfall poses downside risks for the rain fed crop production, livestock, human health, energy and sanitation, therefore there is a compelling need to invest in water infrastructure.
Agriculture declined by 5, 5 percent in 2016 due to El Nino induced drought in the 2015/2016 summer cropping season.
Electricity generation also declined in 2016, on account of reduced output from hydro-power sources.
Water is life hence water infrastructure development is therefore essential for the well-being of the nation.
Since 2010 the country has been embarking on various infrastructure investment to produce all year round and increase production.
Small scale farmers have benefited from $98 million More Food For Africa Programme loan facility and over $60 million of that money has already been drawn down to capacitate farmers.
Other irrigation loan facilities from Spain, Italy and Germany have helped to capacitate commercial farmers.
Last year alone, Government has constructed dams worth $85 million to help farmers from drought effects.