Role of development finance institutions to Zimbabwe’s economic growth: Case of transport and power infrastructure development

Abstract

The importance of Transport and Power infrastructure to a Country’s development cannot be overemphasised. Zimbabwe is facing stagnating economic growth, if not economic decline, it is therefore not surprising that over the years, Zimbabwe’s Transport and Power infrastructure has been deteriorating over the years largely as a result of a lack of financing from the public resources. Like many countries the world over, Zimbabwe has also made use of Development Finance Institutions to be able to finance its infrastructural development. This is notwithstanding the fact that many DFIs have decided to stop providing financing to Zimbabwe due to nonpayment of debts. This study therefore endeavoured to evaluate the role played by Development Finance Institutions in the economic growth of the country, with a specific focus on the investments in the Power and Transport Infrastructure. The study sought to understand the investments that have gone into the country’s power and transport infrastructure since the year 2000 and the funding models which were used to finance these investments during this period as well as the sustainability of these ways of financing. The study was carried out using a descriptive survey research design and employed interviews, questionnaire and documentary research as its chief information sources. The study found out that there has not been significant investment in both transport and power infrastructure over the years. The study also found out that apart from rehabilitation of two power stations, the power stations built in the 1950s are the ones which are still there. The study also revealed that there has been some investment in road transport infrastructure however this has not been at a fast-enough pace meaning more than two thirds of the country’s roads are in a state of disrepair. The study found out that financing for infrastructure in the period under review was mainly from loans from DFI’s, with other internal sources also complementing albeit at a smaller scale. The Study established that the identified funding model is actually the list sustainable. The study recommends focused and increased use of Public Private Partnerships (PPPs) to finance infrastructure development. It also recommended plugging of leakages from the fiscus as well as tackling corruption and increasing resource management system.