adminimmense business opportunities for the construction industry and allied companies.
Since the introduction of the multi-currency system in 2009, the Government has given a special focus to improving the country’s critical infrastructure.
However, low levels of capital in the economy, coming out of the hyperinflationary period means investment into general infrastructure development is still suppressed, resulting in dormant business opportunities.
Earlier this year, the African Development Bank (AfDB) released estimations that said Zimbabwe requires around US$14,2 billion to rehabilitate the existing infrastructure and add new capacity to meet growing demand during the decade ahead.
In a recent note, Imara said although substantial projects are currently being undertaken, this was still below optimal levels.
“Zimbabwe’s economy is on a recovery path and is expected to grow by 9,3 percent for 2011, however, there are a number of infrastructural barriers to the economic recovery.
“In order to eliminate these barriers the Government is prioritising power, water and sanitation, roads, communication and social infrastructure in housing, health and education.
“Construction companies such as Murray & Roberts (M&R) are set to benefit from the deal, as their primary driver is expenditure in capital investment projects.”
M&R’s subsidiary, Proplastic – as a case in point – worked with the local authorities in the replacement of 90 kilometres of piping in Harare.
Imara said there appears to be more opportunities in this particular area insofar as most of the country’s piping is aged and corroded.
The company’s order book for the upcoming fiscal year (2012) already stands at US$30 million.
“With much more rehabilitation still to be done, we expect M&R to win many tenders on the back of its established record,” said Imara.
Despite huge infrastructure deficit, Imara contends that the Government has made good strides to avail funding for capital expenditure, with US$551 million availed in the 2011 budget and a further US$122,3 million through the Infrastructural Development Bank of Zimbabwe.
Notwithstanding the huge business potential latent in infrastructure, a large increase in public spending in infrastructure services can also have a strong growth-promoting effect in terms of a direct productivity effect whereby a higher stock of public capital in infrastructure tends to raise the productivity of other inputs such as labour and private capital.
The Government is however, still constrained financially to carry out such huge projects.
Online Reporter
Sidumisile Mabena