Online Reporter
IT is becoming increasingly obvious that Third World countries have to use a far wider range of innovative ways of raising the sort of money they need to fund their economic and social development.
Targets were set in fairly recent times for development assistance, both in traditional and new areas of combating climate change, and building up renewable energy so that economic development is done with maximum gain and minimum damage.
Developing countries need the extra finance since they are quite correctly being held to the same targeted percentage reductions in emissions of greenhouse gases as the most economically developed countries.
It has, regrettably, become clear that those targets of development assistance will almost certainly never be met and, in fact, there is at present a reduction in aid finance, led by the United States, the world’s largest economy.
While some countries and sources are maintaining their budgeted support, the holes are growing.
A twin approach is now needed for countries like Zimbabwe. We need to look for new sources of finance, including increases in investment finance and to bring maximum pressure to bear to make global finance a lot fairer by, at least, ending illicit financial flows, sanctions and other practices that make a bad position worse.
On the positive side, as one of the ways to find new sources of funds to help meet the United National Sustainable Development Goals, Zimbabwe has now launched its Zimbabwe Renewable Energy Fund (ZimREF).
This fund, independently accounted for, can combine Government, private sector investment and assistance finance.
It has been set up with Old Mutual Zimbabwe, a major financial house with an exceptional reputation and with ties to a global group, to ensure maximum acceptability within the private sector.
Renewable energy in Zimbabwe these days generally means solar, with expansion in hydro generation very risky, considering climate change.
Solar has the huge advantage and potential disadvantage, that it can be decentralised. While large investments feeding the national grid are encouraged, a lot of the solar capacity will be a large number of modest installations.
Here a central investment fund can be almost essential, bringing a wide range of these small installations under a single funding umbrella and ensuring the sort of efficiencies and high standards of financial administration that would normally be seen in only the largest investments.
In other words, ZimREF is designed to do more than just help mobilise funds, but has also been carefully designed to make sure these funds give the most “bang for the buck”.
Outlining the goals of ZimREF at the special UN meeting on sustainable development goals this week, Finance, Economic Development and Investment Promotion Minister Mthuli Ncube saw the funding generated meeting the multiple goals of being inclusive, gender responsive and economically viable.
Meeting electricity needs as sustainably as possible is vital for economic growth.
At the same time making sure that everyone has access to electricity makes huge improvements in the quality of life and many social goals, hence we need the extra volume of power to be generated and making sure that everyone can access it, including previously marginalised people and communities.
While inclusive goals are important, it is also vital that the new sources of electricity can be sustained, hence the economic viability.
The viability goal not only ensures that funding from a wider range of sources is available, it also ensures that the new generation can be maintained and that routine servicing, provision of spares and replacement of worn out equipment is carried out routinely.
The Second Republic has stressed a lot of this sort of use of multiple sources of funds and the maximum cooperation between private and public sectors.
The housing targets, for example, are being met through combinations of Government, public and private developers. Sometimes a scheme might combine State land with private development.
There are other examples in health and education to meet required social development and there is no reason why the closest cooperation cannot be harnessed through ZimREF in energy right down to the household level.
This sort of build-up of local capacity is also important when the limited development assistance budgets are being dispersed and when we are competitively attracting investment.
Those who can show that they are putting their own money and funds from private and public sectors, into something worthwhile, and have the highest standards of efficiency and administration, are more likely to get a favourable hearing.
Development partners and external investors like to back success.
Zimbabweans these days insist on high standards and become very critical when these are not met, so the sort of administration expected by both Government and a major reputable finance house like Old Mutual Zimbabwe will be identical, simply the best.
With that in place it is possible to raise multiple sources of funds, have different sorts of investment returns, and be able to meet multiple goals.
