ZB struggles to raise $150m road fund

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LIVINGSTONE MARUFU

Zimbabwe Stock Exchange listed financial services provider ZB Financial Holdings has struggled to raise $150 million under the final phase of the Emergency Road Rehabilitation Fund (ERRF) due to the inflationary environment and equivocal monetary regime.

The fund, which falls under Zimbabwe National Roads Administration (Zinara) bond, was for sprucing up the country’s road network.

ZB Holdings CEO Ron Mutandagayi told Business Times that the bank last mobilised the road funds in November with all funds transferred to the Reserve Bank of Zimbabwe for distribution. “We have managed to raise only $68 million (45%) of the $150 million resource envelope due to the inflationary environment that the country slithered into in October last year and the ambivalent monetary regime,” Mutandagayi said.

“We don’t know if we can raise more in this market due to the uncertainty of the economic environment. However, we continue to engage Zinara to map the way forward.”

Meanwhile, ZB said its $1 billion partnership with a South African company will improve the country’s road networks in the next two years. Phase one of the project focused 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 will include the construction of new roads and dualisation of some major roads across the country.

According to the African Development Bank’s flagship study on Zimbabwe’s state of infrastructure — the “Infrastructure and Growth in Zimbabwe Report” —which was released in 2011, of the country’s total road network of nearly 90 000 kilometres, the proportion in fair to good condition has declined from 73 percent in 1995 to only 60 percent.

An additional 12 800km was re-classified to “poor condition”, requiring complete rehabilitation at a cost of about $1,1 billion.

Experts argue that the present state of infrastructure in the country, which has declined due to limited investment and lack of maintenance, is one of the most significant constraints to set economic growth targets.

Mutandagayi said the financial institution together with its partners plan to raise $350 million next year.

The fund will help in the dualisation of highways