HARARE – The Infrastructure Development Bank of Zimbabwe (IDBZ) plans to float $60 million bonds early next year, with the funds targeted at bailing out some of the struggling parastatals.
Charles Chikaura, the institution’s chief executive, said the money will be channelled to Tel*One and the Zimbabwe Power Company (ZPC).
“We are planning to go back into the market in 2014 and mobilise $54 million for Tel*One’s fibre optic project and ZPC’s Kariba South power project,” he said.
Tel*One — the country’s sole fixed telephone network operator — recently indicated that it requires close to $30 million to kick-start projects to upgrade its infrastructure and complete fibre optic cable installations in the country.
On the other hand, ZPC’s Kariba South extension project — expected to add 300 megawatts (MW) to the 750 MW already being generated — will gobble around $500 million.
Chikaura said IDBZ, created by the government as a vehicle to mobilise resources for infrastructure development in Zimbabwe through finance from both domestic and international sources, last year raised $30 million for the installation of pre-paid electricity meters.
“We received $18 million on our initial offer last year but the bond remained open and to date it is now fully subscribed,” he said.
IDBZ’s mandate is to mobilise financial and technical resources of appropriate duration and cost for public and private institutions involved in infrastructure development and to facilitate investment in infrastructure.
Economic experts say mobilisation of development capital through issuance of bonds is not new in the country as historically, treasury bills played a significant role in financing Zimbabwe’s infrastructure projects.
The construction of the Kariba Power Station in the 1950’s was financed through the issuance of bonds, the Kariba Bonds.
In another development, Chikaura told delegates attending the Zimbabwe Development Finance School in Harare that development finance institutions (DFIs) play a critical role both as investors and the mobilisation of resource for investment in critical socio-economic projects.
“Not only are FDIs expected to be catalysts of development through investment but they should also be a repository of technical advice to their governments on development matters in their respective sectors of focus as mandated,” he said.
Delegates from Botswana, Lesotho, Namibia, South Africa, Swaziland, Zambia and Zimbabwe will for the next three weeks be attending the development finance school in the country.
Funds to bailout parastatalsTOP TABLE: IDBZ CEO Charles Chikaura, centre, flanked by Mike Ndudzo, left, IDC general manager and Justin Mupamhaga, Deputy Chief Secretary to the President and Cabinet.