Online Reporter
ZIMBABWE is rebuilding its capital financing capacity under the Second Republic, with banks now able to put together substantial loan financing when the debt is well-secured and those responsible for using the money run a tight and efficient management with no loopholes.
One of the first signs of this was the US$125 million syndicated loan arranged by seven banks for Mutapa Gold Resources so it could develop the open cast mine at Shamva, and extend other mining activity.
The bankers were obviously monitoring progress at the Mutapa Investment Fund after its total reorganisation by President Mnangagwa and takeover of all State-owned enterprises.
The record by this year was looking good, with up-to-date audited accounts readily available for many of the concerns making up Zimbabwe’s sovereign wealth fund, as well as for the overall fund. So bankers knew that management had been sorted out and that they could, where certain or almost certain revenues would exceed what was needed to service a debt, safely lend money.
Now a US$400 million infrastructural development fund is being set up, with a quarter of the funds already committed. This, at the beginning, will be used to fund the last 33km of the Harare-Beitbridge Highway and fund the similar Harare-Chirundu and Bulawayo-Victoria Falls Highways.
This work was already being funded, for cash, by the net toll receipts from the tollgates on the highways, but was on the slower side since the money had to be banked and allocated before it could be spent. Borrowing to speed up the work makes sense, and the tolls can be allocated to servicing and repaying the loans, ring-fencing in the jargon.
While the Second Republic inherited a Zinara that was a near total mess, its reformation was an early priority so important was the role such a revenue collector was supposed to play. It collects all vehicle licence fees and tollgate receipts and allocating these to the road authorities which, for national highways, is the Government. Local authorities get their cuts for the roads inside their districts.
The unreformed Zinara was a byword for many of the economic ills then facing Zimbabwe, with a very large share of its revenue going on administration and being very poorly managed with, as court trials found, a high level of corruption. Replacing the board, which then changed the top layer of management, introduced a whole new culture culminating in highly efficient managers presenting clean and accurate accounts for audit on time while they pay out the vast bulk of what they collect to the authorities to give us decent roads.
That has allowed the bankers assembling the investment fund to see exactly what Zinara has in the way of cashflow and revenues and so they are able to make rational business decisions, in this case assembling the largest single finance package from the private sector for many years.
The stable currency and low inflation made the task not just easier, but actually possible, so the bits all fit together.
The results should see a major speed-up of the work of rebuilding and extensively upgrading the national highways, with that one extra bonus over and above the good roads of allowing the Government to charge higher tolls on renovated highways. Vehicle owners and users seem to accept that decent roads can have higher tolls, although they want the decent roads in place before they pay. Promises do not really convince, but construction does.
What is of major importance is that we are talking about Zimbabwean money being mobilised and that keeps the money circulating in the country since it is spent on paying the Zimbabweans actually building the roads, and this can be labour intensive, and mostly Zimbabwean materials.
Similar funding was put in place some years ago for the major east-west road, the Mutare-Harare-Bulawayo-Pumtree Highway, but that was funded by a South African consortium although once again the toll revenue on that highway was allocated. Now we are upgrading sections of that work, such as extending dual carriageways near cities, building the interchanges to separate inner Harare traffic from national traffic and putting in the Christmas Pass bypass near Mutare.
The Second Republic, from the beginning, reckoned that Zimbabwean engineers and contractors could do a lot more of the work previously given to foreign firms, and probably give a lot better value for money. That has now been proven correct. Adding the bankers to the engineers is simply the next step now that the bankers are able to build up their own cash reserves thanks to other reforms.
We are not waiting for some outsider to step in, but are instead getting stuck in ourselves and this is a far better solution. While outside investors are always welcome in the mining and industrial sectors, you cannot really sell off utilities, such as highways, to private investors and here Government has to play a direct role.
That does not mean waste and squandering money, but the Second Republic has shown that it can run tight operations and the culture of insisting on excellent value for money is now solidly entrenched in the public sector, as well as most of the private sector.
