Online Reporter
Nqobile Bhebhe, Zimpapers Business Hub
The Government, through the Zimbabwe Investment and Development Agency (Zida), has set clear thresholds and approval processes for Public-Private Partnership (PPP) projects.
This provides investors with a structured framework for infrastructure and service delivery under the new guideline document. PPP projects are categorised based on value, with distinct approval pathways designed to streamline decision-making while maintaining oversight.
Business strategists say clearly defined thresholds are critical in boosting investor confidence, improving project planning and widening participation in infrastructure development.
“All PPP projects which are valued at less than or equal to US$5 million shall be classified as small-scale projects.
“Any PPP project that is scalable, resulting in an aggregate value over US$5 million, shall not be appraised as a small-scale but a phased large-scale PPP project.
“Small-scale PPP projects shall be appraised and recommended for approval by the PPP committee and shall only be presented to Cabinet for noting through an update by the Minister of Finance, Economic Development and Investment Promotion,” reads part of the document.
“However, the PPP committee, in its discretion, can consider recommending select projects to Cabinet for determination even if they fall below the minimum threshold.
“Notwithstanding the thresholds, all PPP projects shall be appraised and approved in line with the provisions of the Zida Act and this guideline.”
For larger investments, the process is more centralised at the highest level of Government.
“All PPP projects which are valued at more than US$5 million shall be classified as large-scale PPP projects.
“These projects shall be appraised and recommended for approval by Cabinet in accordance with the provisions of this guideline.”
Business strategist with ConsultWorld Enterprise, Mr Busani Malaba, said clarity on project classification removes uncertainty that often deters investors, particularly those entering new markets.
“When investors understand exactly what qualifies as a small-scale project, they can structure their investments more efficiently and align them with the appropriate approval processes. It reduces the guesswork that often comes with regulatory frameworks and allows investors to focus on project viability and returns rather than procedural risks,” he said.
According to Mr Malaba, clearly defined thresholds also improve the quality of proposals submitted to the Government.
“Investors are better able to package bankable projects because they know the expectations at each level. This ultimately shortens turnaround times and improves the chances of projects reaching financial close,” he noted.
Another strategist, Ms Rudo Makoni, said spelling out thresholds lowers entry barriers and encourages broader participation by local and regional players.
“Clear thresholds create a predictable entry point into the market, especially for emerging investors who may not have the capacity to immediately undertake large-scale infrastructure projects.
“It allows them to start small, build experience and scale up over time within a clearly defined framework,” she said.
She noted that this approach is key in developing a pipeline of domestic investors in PPP, adding that Zida should broaden the publicity of the document.
“When smaller players are given a clear pathway to participate, it helps to build local capacity and ensures that infrastructure development is not dominated by a few large firms. This has long-term benefits for economic inclusivity and sustainability,” said Ms Makoni.
Mr Malaba added that the distinction between small and large-scale projects also plays a critical role in capital allocation and risk management.
“It allows investors to match their financial capacity with the right project size while also anticipating the level of Government scrutiny, compliance requirements and approval timelines involved. This is particularly important for institutional investors who must carefully manage risk exposure,” he said.
He said the framework also assists lenders and financiers in assessing projects.
“Banks and development finance institutions are more comfortable when there is regulatory clarity. It makes due diligence easier and helps in structuring appropriate financing instruments for different categories of projects,” he said.
Ms Makoni said the framework ultimately enhances transparency and strengthens trust between the public and private sectors.
“When the Government clearly defines what constitutes small and large projects, it removes ambiguity and creates a level playing field. Investors are able to compete fairly, and this transparency is critical in attracting long-term private capital,” she said.
She added that predictability in approvals is a major drawcard for international investors.
“Global investors look for markets where processes are clearly defined and consistently applied. By setting out these thresholds, Zimbabwe is signalling that it is serious about creating an enabling environment for PPPs and infrastructure investment,” said Ms Makoni.
The thresholds effectively create two entry points into the PPP market.
For projects at or below US$5 million, investors benefit from a faster and potentially less bureaucratic process, as approvals are handled at the PPP committee level, with Cabinet only formally noting the projects.
This makes smaller projects attractive for emerging investors or firms testing the Zimbabwean market.
However, according to the document, investors should be mindful that scalability matters.
A project initially structured below US$5 million but designed to expand beyond that threshold will be treated as a large-scale PPP and therefore subject to Cabinet approval.
For projects exceeding US$5 million, Cabinet approval becomes mandatory.
While this may involve a longer process, it also offers stronger Government backing, which can enhance investor confidence, particularly for capital-intensive infrastructure such as energy, transport and water projects.
According to the guideline, PPPs refer to long-term contracts between a public entity and a private party for the development (or significant upgrade or renovation) and management of a public asset, in which the private party bears significant risk and management responsibility throughout the life of the contract.
The private party must also provide a significant proportion of the finance at its own risk and the remuneration should be significantly linked to the performance, and or demand or use of the asset or service to align the interests of both parties.
The Government has taken a strategic policy decision to promote PPPs for infrastructure development and service delivery.
A properly implemented PPP programme addresses infrastructure and services gaps, helps to improve the efficient allocation of resources, attracts private sector limited or non-recourse financing, allows for effective risk sharing between the private and the public sector and creates room to avoid restrictive covenants found in other financing agreements.
Added to that, it leverages private sector expertise, improves infrastructure and service delivery, fosters development and strengthening of financial capital markets and complements the Government in anchoring economic growth and development through the provision of enabling infrastructure.”
The guideline outlines several defining features that investors must incorporate when structuring PPP projects.
These include long-term contracts between public and private parties, with construction, operation and management bundled into a single agreement.
There must also be a significant transfer of financial, construction and operational risks to the private partner over the duration of the contract.
In most cases, the parties are required to establish a Special Purpose Vehicle (SPV) to implement the project, ring-fencing risk and financing.
Revenue recovery mechanisms are also clearly defined.
The document notes that the costs incurred by the private party shall be recovered in whole or in part through fees paid for the use of services provided by the project or may be recovered through public sector payments.
Public sector payments shall be based on performance standards defined in the PPP contract, ensuring accountability and efficiency.
The guideline also clarifies arrangements that fall outside the PPP framework, an important distinction for investors structuring deals.
These include projects where both parties are public entities or where substantial financial, technical or operational risk is retained by the public entity.
Other non-PPP arrangements include donations by private entities to the Government, outright privatisation involving permanent transfer of public assets or full public financing of a project.
Additionally, arrangements such as the commercialisation of public entities into State-Owned Enterprises or licensing agreements in sectors like petroleum and mining, including Exclusive Prospecting Orders (EPOs) are not considered PPPs.
Overall, the threshold framework provides clarity and predictability, two key factors for attracting investment.
By separating small-scale and large-scale projects and aligning them with appropriate approval channels, the Government is seeking to accelerate project implementation while maintaining accountability.
According to the Guideline document, there are set conditions for termination of the PPP Agreement
A PPP agreement can be terminated by breach of contract, insolvency or bankruptcy, force majeure, change in law, mutual consent, non-performance and expiry of the agreement term.
