Livingstone Marufu
ZB Financial Holdings (ZBFH) has entered into joint venture arrangement with South Africa’s Neo Capital as the group seeks to raise $1 billion over the next two years to upgrade local road infrastructure.
The deal comes at a time when the financial institution has already raised $105 million through a bond issued in partnership with Zimbabwe National Roads Administration (Zinara).
ZB CEO Ronald Mutandagayi told Business Times that the billion dollar road infrastructure deal would see a sudden face lift in the country’s road network in the few years to come.
He said the plans will include pothole filling and resurfacing in the short term and dualisation in the long term strategy.
Consequently a project management unit was created to manage the road funds.
“We have entered into a joint venture arrangement with South African company called Neo Capital. We partnered the company as it has some reputable road construction deals it has undertaken in South Africa particularly, the Gauteng province and it is that expertise in terms of funding this sort of infrastructure that we need to tap into,” said Mutandagayi.
“Initially we need $150 million between now and December we need $150 million. Next year we need $350 million to make it $500 million. We are targeting to raise about $1 billion in the next two years to transform country’s road networks .We can then morph into a short term to medium term and then long term plan.”
While phase one of the project focuses on preserving the integrity of the current network by rehabilitating the drainage system, patching potholes, clearing culverts and repairing bridges, the second phase involves periodic maintenance and resurfacing.
The third phase, Mutandagayi said will include the construction of new roads and dualisation of some major roads across the country.
The first tranche of infrastructure bonds issued by the bank, particularly to fund road works, appears to have encouraged a healthy appetite for similar bonds backed by the highly liquid institution.
Creation of project management unit
ZB together with its partners has created a special purpose vehicle to monitor these funds to ensure the continuity and success of the project.
“Due to the massive nature of the project, we have created a project management unit which will guarantee the success of the project,” Mutandagayi said.
“The management unit consists of ZB, Neo Capital, Department of Transport, Zinara, City of Harare and local councils to manage the fundraising for that particular project.”
The management unit is expected to be carry out quarterly meetings to update on the progress and hindrances of the projects.
“We are doing a lot of work with Zinara. We are in the process of raising about $150 million with them. As you know last year we raised around $105 million for the emergency road repairs and they have come back now for the additional $150 million.
“By next year, we expect to increase the funding to $500 million,” he said.
Meanwhile, Zinara chief executive officer Nancy Masiyiwa-Chamisa recently noted that though the fund was considering floating a bond that was “even double or thrice the value” of the first one, it was not going to “over-commit”.
