Listed financial services group, ZB Financial Holdings (ZBFH) has raised US$62m to go towards the rehabilitation of the country’s road network, which has suffered neglect over the years, it has been learnt.
The condition of Zimbabwe’s road network has deteriorated over the past few years as a result of lack of funding for routine and periodic maintenance.
Official data obtained from the Ministry of Transport and Infrastructural Development showed that nearly 80% of Zimbabwe’s road network is in poor condition.
Three years ago, ZB Capital, a unit of ZBFH, was engaged by the country’s State-owned road administrator, the Zimbabwe National Road Administration (Zinara) ago, as lead advisor in the roads project.
That same year, ZB floated a commercial paper to raise funds for the roads repairs.
This week, ZBFH group chief executive officer Ron Mutandagayi told Business Times that the bank mobilised US$62m.
The interest obligations to pension funds that invested in the bonds have been met, Mutandagayi said.
“(About) US$62m was raised under the three-year paper. Performance has been excellent and all repayments and interest payments have been settled in full,” Mutandagayi told Business Times this week.
Mutandagayi disclosed to this newspaper this week that ZB Capital was looking to float more instruments to raise money for Zinara.
“ZB Capital will continue to work with Zinara in all its future fund raising activities.
The need for funding for road development and maintenance is there and it is expected that going forward Zinara will once again seek capital for such activities from the local capital market,” Mutandagayi told Business Times.
“ZB Capital still enjoys a good working relationship with Zinara and will always make an effort to provide tailor made and sustainable financial solutions for them,” he said.
The development comes at a time when local banks are said to be considering pulling out of Zinara’s road projects.
The amount of resources required to cater for the accumulated requirements for the country’s road network rehabilitation and development is enormous, analysts said this week.
Most roads are now way beyond their design life and are in an advanced state of disrepair after being used for the past 60 years.
According to recent studies by the African Development Bank and the World Bank, Zimbabwe requires about US$5bn to rehabilitate the country’s entire road network that has been affected by years of neglect.
A recent report by the Ministry of Transport and Infrastructural Development estimates that Zimbabwe’s 95 000 kilometres (km) road network need to be attended to.
Of these, about 17 400km tarred roads, which fall under the national government and urban authorities need to be upgraded or maintained while about 77,000km of gravel and earth roads that largely fall under the government, rural district authorities and the District Development Fund are also in need of attention.
In February 2017, the government declared that the country’s roads were a national disaster.
Consequently, road authorities including the Department of Roads, District Development Fund, urban and rural district councils, embarked on the Emergency Road Rehabilitation Programme to restore and expand the country’s road network to improve safety conditions on roads plagued by a scourge of traffic accidents.
But, the projects have been hampered by lack of funding in the past few months. In June this year, Zinara disbursed about ZWL$143.3m for maintenance of roads countrywide.
The department of roads in the Ministry of Transport and Infrastructural Development, District Development Fund urban and rural district councils were the beneficiaries of the funds.