Sikhulekelani Moyo [email protected]
ZIMBABWE is beginning to demonstrate meaningful progress in rebuilding key infrastructure needed to support sustainable industrial growth, with business leaders saying improved electricity, water security and rail rehabilitation are creating a compelling investment proposition.
Bulawayo businessman and former Zimbabwe National Chamber of Commerce (ZNCC) Matabeleland region vice-president, Mr Louis Herbst, said the improved electricity availability, local manufacturing and transformer exports are an important economic signal.
“This demonstrates progress not only in power generation and reliability but also in our growing capacity to manufacture critical infrastructure equipment, substitute imports and compete in regional export markets,” said Mr Herbst.
He said developments in water security and transport infrastructure bolster this assertion.
“The Gwayi-Shangani Dam, now nearing completion, together with the associated pipeline project, present significant opportunities for Bulawayo and the wider Matabeleland region.
“Reliable water supplies will unlock opportunities in manufacturing, agriculture, agro-processing and industrial expansion,” he said.
“Equally, the rehabilitation of National Railways of Zimbabwe locomotives and rolling stock signals renewed commitment to restoring freight capacity, reducing logistics costs and improving the movement of raw materials and finished products.”
Mr Herbst said that, when considered collectively, the developments establish conditions for new factories, industrial parks, engineering enterprises, energy projects and export-oriented businesses.
For local and foreign investors, he said this represents an opportunity to participate in an economy progressively resolving some of the fundamental infrastructure constraints that have historically limited industrial competitiveness.
Bulawayo, he said, with its established industrial base, skilled workforce and strategic regional position, is particularly well placed to benefit.
“The next phase must be about translating infrastructure investment into productive economic activity, increased manufacturing capacity, import substitution, export earnings and sustainable employment,” added Mr Herbst.
“Zimbabwe is progressively building the infrastructure for industrialisation. The opportunity now is for capital, technology and enterprise to follow. Vision 2030 can no longer be a slogan; it is now clearly and evidently a reality!”
Improved power supply and growing solar investments are some of the key milestones delivered under the Second Republic led by President Mnangagwa, whose administration is now seized with revamping industrial manufacturing growth, among other sectors of the economy.
This marks a major shift for businesses that previously faced frequent power supply interruptions, which disrupted manufacturing processes, affected stock and increased operational costs.
Challenges of power supply, due to limited new investment and aging equipment, were worsened by a severe drought that reduced water levels at Kariba South hydro power station, Zimbabwe’s second-largest power facility.
Outdated equipment suppressed generation from Hwange Power Station, the country’s biggest electricity plant.
To resolve the supply deficit, the Government installed two new generators at each of the main power stations, and is working on renewal of the old section of the Hwange power plant.
Bulawayo Business Forum (BBF) chairperson Mr Heresy Herry said industry must acknowledge the work done by the Zimbabwe Electricity Supply Authority (Zesa).
“I think as an industry, we need to start by acknowledging the work that’s been done by Zesa. There has been significant stability in terms of power supply,” said Mr Herry.
“There has been consistency in that regard and there’s been a positive knock-on effect because that has allowed us to plan our shifts accordingly, which has found expression in our capacity utilisation. So, there’s been a positive knock-on effect, which has really also translated and been transferred on to our profit and loss accounts.
“Plus, also remember alternative power is very expensive. You can’t run a business on a generator, especially at large scale. So, that was always a significant body blow for business whenever we had to find ourselves funding, purchasing diesel to augment the power that is not there. We are totally appreciative of Zesa’s performance in being able to provide power with consistency.”
However, Mr Herry said the industry is still facing challenges around transmission and distribution infrastructure.
“Be that as it may, we feel that there are certain areas where there is need for improvement. Zesa needs to address the issue of the transmission and distribution infrastructure. You know, a lot of businesses, industries, they are seeing a lot of technical faults,” he said.
“Technical faults also damage equipment. They act as a destabiliser to the flow of production, which also then increases the cost of production.
He said another major impediment is the aspect of value-added tax (VAT).
“He called on the Government to scrap VAT on importation of power generation equipment, saying that, as an industry, they are very keen to also look for alternative ways of producing power in situ on campus.
“Imagine if you are doing a power generation project valued at US$100 million it means you have to look for US$15,5 million to pay VAT.
“Although you may potentially claim that back, it’s an outflow,” said Mr Herry.
“Without outflow, you also incur the cost of funding. And with the high cost of borrowing, that is a serious impediment.
“I think power is the input for anything. Why don’t we wait for the eggs to hatch and then we start deriving value as opposed to wanting to feed on the egg before it morphs into a chicken.”
The productive sector tariff, especially the daytime tariff, Mr Herry said, is too high and is hurting competitiveness as Zimbabwe prepares to join the African Continental Free Trade Area.
He also said current legislation does not allow independent power producers (IPPs) to sell directly to heavy energy users, but forces them to go via Zesa.
“A lot of them have found themselves sitting on units that they can’t convert into commercial value because they have to then wait on Zesa. Whereas they could also be allowed to sell to heavy energy-dependent industries directly,” said Mr Herry.
On climate risks, he flagged El Niño as a key concern for Kariba power generation and said the energy authorities need a contingency plan to safeguard gains of the last 12 to 24 months.
“But overall, it’s commendable, the performance by Zesa. They just need to look at these issues that I have highlighted,” he said.
Experts have said Zimbabwe’s more than 300 days without power load shedding has improved industrial productivity, reduced reliance on generators and given businesses greater confidence to plan long-term investments.
