HARARE – The Infrastructure Development Bank of Zimbabwe (IDBZ) says it is targeting to achieve $250 million capitalisation in 2018.
This is way above the $100 million minimum capital requirements to be achieved by commercial banks by 2020.
IDBZ chief executive Thomas Sakala said although the bank had developed a road map to reach its targets, strong support by major shareholders will also strengthen the financial institution’s ability to make significant interventions in closing the infrastructure gap through financing both refurbishments as well as new infrastructure projects in key sectors.
This was after government — the majority shareholder in IDBZ — recently injected an additional $20 million into the bank.
“From its improved capital position, the bank has set up a Project Preparation and Development Fund (PPDF) facility with an immediate allocation of $2,5 million,” Sakala said, adding that this was projected to be boosted to $5 million by the beginning of 2017.
“It is hoped that these internal resources will be complemented with support from external resources to attain a level of $10 million in the near future,” he said.
The former African Development Bank vice president said the PPDF facility was conceived by the IDBZ as a pragmatic response to the need to meet the early stage project preparation and development funding gap which, from empirical evidence, has been the major bottleneck to attracting investment on most infrastructure projects.
“The absence of bankable feasibility studies confirming overall project viability partly explains the slow uptake of the mega deals concluded in the recent past by the country’s leadership. Through the PPDF window, the bank will ensure that priority infrastructure projects or concepts are developed to bankability in a timely and transparent manner — and that these can then attract the right levels of investment for successful execution,” Sakala said.
The PPDF funding, which will be revolving in nature, is expected to continue receiving additional injections from other key stakeholders in the infrastructure value chain.
The fund will also benefit from the recoupment of part of the early-stage preparation funding from successfully promoted projects where investment has been secured for implementation.
Promoters of projects will be expected to demonstrate commitment through contribution of between 5-10 percent of project preparation costs.
Eligible projects to be considered for funding through the PPDF facility are those falling under the key sectors of energy — generation, transmission and distribution — transport, water and sanitation, housing, information communication technology and tourism.
Sakala said the fund will also cater for economically viable development projects in these same sectors of the economy including those coming under the auspices of community share owner trusts.