THE Infrastructure Development Bank of Zimbabwe (IDBZ) ability to increase its capital to US$250 million by year end is partly dependent on government’s successful conclusion of reengagement talks and payment of arrears to multilateral institutions such as the World Bank (WB) and Africa Development Bank (AFDB).
According to IDBZ chief executive Thomas Zondo Sakala, the institution had set out to increase its capital from US$70 million to US$250m. He emphasized that the country’s infrastructure agenda is large requiring an estimated minimum of no less than $1.60 billion per year. For the Bank to play a meaningful part in line with its mandate it needs to be optimally resourced – hence the stated ambition.
“We set out to be a US$250m Bank by end of 2018. The Capitalisation Strategy was approved by the Board. However, the successful implementation of the strategy was based on certain assumptions, one of which is the successful completion of the reengagement process by Government.” said Sakala.
He said the Bank welcomed the recent decision by Cabinet to have the institution identify strategic partners as this would help attract national, regional and international investors – including some of its historical shareholders such as the AfDB, EIB etc.
“We would like some of our sister regional institutions and Sovereign Wealth Funds which have a focus on infrastructure development to seriously consider being Shareholders, as well as extend Lines of Credits, co-finance projects etc. The AfDB was one of the founders Shareholder of our predecessor, the ZDB. They are still nominally a Shareholder of the IDBZ. Unfortunately, as happened with others such as FMO etc, their equity was severely eroded during the difficult macroeconomic period the country went through .
The AfDB recently approved a US$50m additional equity into the Nigerian Development Bank. We want them to also help us with similar assistance. Unfortunately we cannot have conclusive discussions before we pay our longstanding arrears”.
Sakala said the bank had also increased its project preparation fund from US$2.5m to US$5m as it sought to build a robust pipeline of bankable projects for the country.
He also applauded the minister of Finance Patrick Chinamasa for allocating an additional sum of $20 million in equity under the 2018 budget. Furthermore, Treasury has over the past two years allocated a specific budget for projects’ preparation. This is in line with best practice among countries which have recorded good infrastructure development. This is a key necessary condition as the country moves to attract financers for its mega projects.
The WB and AfDB estimate that Zimbabwe requires between US$1.6 and $2 billion per annum to meaningfully addressing its infrastructure deficit.