HomeBusinessCyclone Dineo adds to Zim’s economic woes

Cyclone Dineo adds to Zim’s economic woes

ZIMBABWE’S economy is likely to further deteriorate this year following heavy rains which destroyed key economic infrastructure like roads, dams and bridges, analysts have warned.

BY MTHANDAZO NYONI

Trees stuck on Umzingwane bridge after being swept upstream by floods in Beitbridge. Picture: Shepherd Tozvireva
Trees stuck on Umzingwane bridge after being swept upstream by floods in Beitbridge. Picture: Shepherd Tozvireva

A good number of the country’s roads and dams were destroyed by excessive rains in the wake of Cyclone Dineo which hit the country hard at the end of last month and was immediately followed by another deluge — a product of the Inter Tropical Convergence Zone.

The Bulawayo-Masvingo highway was last week closed to traffic after Nkankezi bridge in Filabusi was washed away.

The bridge gave in to raging waters after Sukasihambe dam, about 20km upstream, burst its wall on Sunday night, flooding Nkankezi River.

On Thursday last week, communities living between Filabusi and Mbondweni in Insiza South were cut off from each other after a bridge in Kalna area was swept away by floods.

Several dams supporting irrigation schemes in Matabeleland and Midlands regions were also destroyed, leaving farmers counting their losses.

Economic analysts told Standardbusiness last week that Zimbabwe’s economy would be further crippled by the destruction of key economic infrastructure.

According to the 2017 national budget strategy paper prepared by Finance and Economic Development minister, Patrick Chinamasa, Zimbabwe’s economy was projected to grow by 4,8% in 2017, up from the sluggish 1,2% estimated in 2016, due to a good agricultural season.

But with this destruction of key economic infrastructure, the projection could be hurt badly.

“The government has no resources to rebuild the destroyed infrastructure as it is already struggling just to maintain the old one,” said economic analyst Reginald Shoko.

“As a result of failure to rebuild the infrastructure, the economy will remain or mostly likely continue on the downward trend as infrastructure plays a pivotal role in economic development. In the same breadth, it might create a serious opportunity for investors who have capacity to rebuild,” he said.

Economic and policy analyst Butler Tambo said on its own, Zimbabwe did not have the capacity to rebuild the destroyed infrastructure.

“This can be seen with evidence from the 2017 national budget which only had $188 million set aside for infrastructure and utility cluster, with the bulk of the $3,4 billion budget going to recurrent expenditure. This amount is inadequate,” Tambo said.

According to the 2017 national budget, the total development partner support for this year is projected at $450,4 million, against $493,7 million availed in 2016. Of this amount, $233,7 million is from bilateral partners, while $216,7 million is from multilateral partners. Sectors targeted to benefit from this support include health, education and other basic social services, agriculture, water and sanitation, governance, capacity building across sectors, as well as transport and energy.

“Even with such promises of developmental loans that are expected into the country in 2017, none of the funds will go to infrastructure development,” Tambo said.

Economic analyst John Robertson said funding required for infrastructural repairs would certainly put pressure on the budgets of both the government and municipalities.

He said where this sort of expenditure exceeded the available revenue resources; the normal recourse was to borrow the money by issuing government or municipal bonds.

“But Zimbabwe’s authorities have such a poor record for repaying loans that attempts to raise funding through bond issues will almost certainly fail.

“Because of the urgency of many of the repairs and because the economy’s efficiency will be deeply affected until the repairs are carried out, the government and the municipalities are likely to divert funds from other purposes to meet the cost of the most important challenges,” Robertson said.

He said delays in attending to the needs of these would also come at a price to the welfare of the nation’s critical social services like health and education which were likely to receive much less assistance than required.

Transport and Infrastructural Development minister, Joram Gumbo conceded that the country was in a fix.

“This is a disaster. Our roads and dams have been washed away. With the rains, we can’t construct a road and its making our work very difficult. It’s very difficult for me. We have been trying to work on some of those bridges but they got washed away overnight,” Gumbo said.

President Robert Mugabe has already declared the situation a national disaster.

Gumbo said government had put plans in place to mobilise resources and was looking at raising $80 million.

He said Chinamasa would avail $30 million while $50 million would be sourced through bank loans using Zinara. He also implored private companies to chip in and help.

Zimbabwe has an estimated total road network of 95 000km, most of which requires extensive rehabilitation.

Government already has a national road development and rehabilitation programme which requires $5 billion over the next 10 years. However, due to lack of funds, the programme is struggling to take off.

Economic analysts said given the state of the country’s economy, government should rebuild infrastructure through public-private partnerships or use funds from the Sovereign Wealth Fund.  

“The government is left with no option but to call for partnerships in the rebuilding of the infrastructure either through foreign direct investment or the PPPs [public-private partnerships],” Shoko said.

Robertson said Zimbabwe should revise restrictive policies affecting new investors and aid organisations’ ability to function.

“The country has to work hard to rebuild trust, having treated many foreign agencies very badly, having shown disrespect towards investment protection agreements and having failed to keep many promises to foreign governments,” he said.

He said Zimbabwe had damaged its chances of being treated sympathetically by the world, adding that it needed to improve its international relations.

Tambo said government would have to be innovative and rebuild key infrastructure through PPPs.

“The advantage of rebuilding the roads, bridges, dams and other infrastructure like schools is that it will lead to massive boom in employment in the construction sector. This will in turn create a larger pool of tax payers for government revenue which it so desperately needs at the moment,” Tambo said.

He said government could also use food for work programmes in affected rural areas to reconstruct the key infrastructure and that way, it could make the reconstruction efforts cheaper and more manageable and at the same time beneficial to affected communities who would get employment as they took part in local development.

“Another way to fund key infrastructure development would be to use funds from the Sovereign Wealth Fund; but sadly for the country, this was an idea that was mooted and a Board was set up to run it but no tangible work has been done to create savings for future generations from the country’s vast natural resources,” Tambo said.

“It is a missed opportunity which can still be salvaged if government were to commit itself to living within its means and cut on unnecessary expenditures like a bloated Cabinet and civil service.”

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