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Infrastructure development requires external funding

Infrastructure development requires external funding


Zimbabwe’s infrastructure development requires all stakeholders which include governments, private sector, multi-lending institutions and aid groups among other participants to accelerate economic development.

In the absence of international funding due to debt and arrears, the country was using domestic resources to fund its infrastructure projects.

But experts said there is a need to involve all players to achieve Vision 2030 rather than the current isolationist mentality where an overdrive spending on roads and other projects will trigger inflation.

Mike Juru, Integrated Properties CEO, said the government is overwhelmed by many obligations hence there is a need to explore various opportunities to fund projects to spur economic development.

“The nexus between infrastructure ownership and funding in third-world countries is a complex and multifaceted issue that involves a variety of stakeholders, including governments, private investors, international financial institutions, and aid agencies. These entities interact in various ways to finance, build, and manage infrastructure projects that are crucial for economic development and public welfare.

“Many infrastructure projects in third-world countries are traditionally owned and funded by national governments. Governments may use public funds from tax revenues, natural resource earnings, or by issuing government bonds, however, due to budget constraints and often significant debt levels, third-world countries may struggle to invest adequately in infrastructure,” Juru said.

He said International aid agencies and bilateral donors often provide grants or soft loans to finance infrastructure in third-world countries and these funds can be crucial for supporting essential infrastructure in the poorest nations where the ability to attract private investment is limited.

“Institutions like the World Bank, African Development Bank, and Asian Development Bank provide significant funding for infrastructure projects and these institutions often offer loans with concessional terms, combining finance with technical expertise and policy advice.

  “Some governments encourage Foreign Direct Investment in infrastructure, offering incentives and regulatory support to foreign companies willing to invest. FDI can bring in not just funding but also technology and expertise, although there can be concerns about foreign control over critical infrastructure,” Juru said.

He said the country can utilise debt-financed infrastructure where debt can be sourced from bilateral creditors or through issuing sovereign bonds on international markets.

This comes as there has been a proliferation of China-financed or invested projects in Zimbabwe mostly covering electricity, airports and communication facilities which include the Robert Mugabe International Airport and Kariba South extension.

 “In recent years, China has become a major financier of infrastructure in third-world countries, particularly through its Belt and Road Initiative (BRI). While this has provided much-needed funding, it has also raised concerns about increasing debt burdens and the strategic implications of Chinese ownership or control over key assets,” Juru said.

He said effective regulation and strong institutions are essential for managing the complex interactions between various stakeholders in infrastructure projects and good governance is critical to ensure that infrastructure serves public interests, is sustainable, and provides a fair return on investment.

“Civil society organisations can play a role in advocating for transparency, accountability, and sustainability in infrastructure projects. They may also help to ensure that projects meet the needs of local communities and do not lead to social or environmental harm,”he said.

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