Online Reporter
Sikhulekelani Moyo
Zimpapers Business Hub
Local authorities’ challenges in financing urban infrastructure are not due to a lack of financing instruments, but rather to investors’ lack of confidence in municipal land and revenue streams, the National Economic Consultative Forum (NECF) says.
NECF policy analysis manager Mr Godfrey Gowere said this at the National Economic Consultative Forum last week while presenting a paper titled “Private Sector Finance for Urban Infrastructure in Zimbabwe: A Comparative Assessment of Land-Based and User-Financed Models”.
The local authorities face a severe urban infrastructure financing problem driven by broken traditional revenue models, unfunded mandates and a multi-billion-dollar funding deficit.
Traditional municipal budgets cannot cover capital needs, making external loans, infrastructure bonds and carbon credits necessary.
Mr Gowere said the country’s annual urban infrastructure requirement stands at US$2 billion, of which only 20 percent is being met, leaving an 80 percent gap.
“We see this gap in terms of backlogs in rehabilitation of our urban roads, which constrain mobility, logistics and urban productivity,” he said.
“We also see this gap in terms of infrastructure deficits in water and sanitation and this undermines service reliability and municipal financial sustainability. We also see this gap in terms of housing and serviced land.”
Private investors demand prescribed asset status and streamlined procurement, but face bureaucratic delays and scepticism regarding local authorities’ project management capacity.
“The core question that this paper tried to answer is: how can Zimbabwe mobilise private capital by converting land assets and user-generated revenues into credible infrastructure financing?”
“The challenge is simply not a shortage of financing instruments, but municipal assets, revenues and projects must first become credible and investable. A private investor will not invest if they cannot trust the asset or the revenue,” he said.
Four major hurdles were identified: institutional constraints, where urban councils have capacity gaps in land administration, asset management, valuation, revenue administration and project preparation.
There is also the challenge of implementation and coordination gaps despite existing policy allowing private participation; governance weaknesses in accountability, record-keeping and financial controls; and project bankability where needs are not converted into investment-ready projects.
“The financing models cannot be assessed in isolation from the institutional and governance conditions required for them to work,” he said.
The paper used a comparative analytical approach, comparing Zimbabwe with China and India on land value capture and development charges, Kenya and Rwanda on utility reforms and Chile and Australia on road concessions and tolling.
The data were obtained from national policy documents, legislative documents and peer-reviewed articles.
The objective was not to take international experience as a template for direct application, but to focus on enabling conditions for adaptation.
Mr Gowere said Zimbabwe already has a policy foundation, but implementation capacity remains a major constraint.
“We have the National Development Strategy (NDS2) prioritising infrastructure, public-private partnerships (PPPs) and innovative financing,” he said.
“We have the Zimbabwe Investment Development Agency (ZIDA) Act providing for the PPP framework. We have the Regional, Town and Country Planning Act, which provides the prescribed percentage contributions where developers contribute to infrastructure.
“And we also have the Infrastructure Development Bank of Zimbabwe (IDBZ) with its catalytic role of long-term finance and project preparation.”
Key institutions include urban local authorities that hold land and originate projects and IDBZ, ZIDA and contracting authorities who provide financing and the regulatory framework.
Mr Gowere said binding gaps remain: weak revenue systems, limited land and asset management capacity, governance weaknesses and insufficient project preparation.
“According to the evidence, in 2025 the bank posted a core capital of US$17 million and this is modest in terms of the 80 percent gap that, as a country, we are experiencing and this calls for the need to strengthen the bank’s core capital,” he said.
“We have weak coordination across the project cycle. Overall, the message is that as a country we do not need to start from zero. We need to make what we have work.”
Governance weaknesses directly undermine the credibility of land and revenue-based financing.
According to 2025 Auditor-General findings, out of 367 total issues, 245 were governance-related, translating to 67 percent, a huge increase from 55 percent in 2024.
Examples cited include the Kwekwe City Council, where stands valued at around US$1,7 million were sold, but proceeds could not be traced in financial statements, with incomplete sales and balance records.
In the Masvingo City Council, land transactions valued at US$94 000 had no invoices, no sale agreements or a trace in the accounting system.
Similar cases were observed in Harare and Mutare, pointing to weaknesses in valuation and reporting of public assets.
“Before municipal land can be leveraged for infrastructure finance, it must first be identifiable, transparently allocated, credibly valued and properly accounted for,” said Mr Gowere.
“If these issues are not addressed, we can forget about crowding in private capital and covering that 80 percent gap.”
Mr Gowere said on land-based models, China implemented land value capture and land finance, mobilising 3,4 trillion Yuan in 2018 alone.
Over two decades, Shanghai and Beijing now have the largest metro systems in the world, Wuhan has more than 300 subway stations and Shenzhen is now a leading economic hub.
“The lesson is clear for Zimbabwe: land can be a strategic financing asset, but requires strong land administration, coordinated planning and prudent borrowing,” he said.
India implemented a development charges model and public-private servicing, with success stories like the Pradhan Mantri Awas Yojana framework, where 18 million housing units were constructed and Rajiv Awas Yojana, where 4 571 units were built, but with low uptake due to inadequate supporting infrastructure.
“Land and housing alone is insufficient. We need to provide it with the supporting infrastructure,” noted Mr Gowere.
Zimbabwe already has a statutory foundation under prescribed percentage contributions of up to 20 percent of a property’s total value that can be made in cash, land or both.
Mr Gowere said contributions are not always reinvested for infrastructure.
Existing public land and private partnerships such as the Kudirigo project between Harare City Council and CABS, plus partnerships involving Shelter Zimbabwe, Homelink, NBS, FBC and Puregold have supported housing delivery, but inadequate infrastructure servicing, affordability and project execution have constrained scalability.
“We need to integrate land-based financing with infrastructure planning,” he said.
On user-financed transport models, Chile supported over 90 infrastructure projects through transparent procurement, predictable concessions and stable regulation, while Australia financed major urban toll roads based on rigorous traffic demand modelling, transparent risk allocation and strong institutional oversight.
Mr Gowere said Zimbabwe already has a user-paying foundation through the road fund, with utilisation by urban councils improving from 69 percent in 2022 to around 92 percent in 2025.
But revenues are not readily available as project-specific, ring-fenced cash flow.
“We need to complement this system and use selective concessions for commercially viable corridors,” said Mr Gowere.
“We can start with pilot projects, for example in Harare and Bulawayo, decentralising the concession framework under BOT, allowing investors to recover costs through affordable ring-fenced tolling systems at local level.”
For water, lessons from Rwanda and Kenya show strengthening regulation, performance-based management and institutional coordination improves utility governance and financial sustainability.
Higher tariffs alone do not create financially sustainable utilities.
