BusinessSectorsZimbabwe thirsts for cheap credit lines, Botswana lends a hand


Posted on Tuesday, 04 September 2012 12:20

Zimbabwe thirsts for cheap credit lines, Botswana lends a hand

By Janet Shoko

Tendai Biti, Zimbabwe's finance minister says the country needs capital in the form of foreign direct investment, lines of credit and cheap access to finance/Photo©ReutersZimbabwe is in desperate need for cheap credit lines, as the country seeks to revamp collapsing infrastructure and boost its mining sector.

Finance Minister, Tendai Biti said the country needed at least $20 billion in cheap credit, a figure that is five times the country's annual budget.

On Monday the country, emerging from a decade long economic depression, received a $63.4 million credit facility from Botswana, a drop in the ocean compared to what Zimbabwe needs, but an optimistic Biti says such facilities are the only way Zimbabwe can get back to its feet.

"The thirst for capital in our country is huge and high. On infrastructure alone, the country requires $14.5 billion," he said. "The mining sector requires $5 to $7 billion to be fully operational. Our country needs capital in the form of foreign direct investment, lines of credit and cheap access to finance."

Repairing infrastructure, such as roads, railways, dams and power plants, is recognised as a key strategy in reviving the economy.

A report on the infrastructure needs by the African Development Bank (AfDB) estimated that the country required at least $14 billion to rehabilitate its ageing infrastructure and create new capacity to meet growing demands.

AfDB in its report, noted that of the 90 000km of road network, the proportion in good condition had declined from 73% to 60%. The amount of freight carried on Zimbabwe's railways fell to 2.7 million tonnes in 2009, just 15% of the original network capacity.

In the first six months, Infrastructure Development Bank of Zimbabwe (IDBZ) disbursed $100 million for 43 infrastructure projects in a development expected to stimulate activity in the construction sector.

Funded projects span over the energy, transport, water and sanitation, housing development and information communication technology sectors.

IDBZ public relations executive Priscilla Mapuranga says the amount and quality of infrastructure development in any economy was key to stimulating activity, as the cost of doing business would become lower and affordable.

"There is a big mismatch between amounts of capital required for infrastructure and the domestic capacity to meet these long-term capital requirements," Mapuranga said.

She said the bank intended to vigorously promote issuance of infrastructure bonds to close the funding gap being experienced at the long end of the market.

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