Mobilising local markets important for Zimbabwe
The Zimbabwean Minister of Finance and Economic Development, Professor Mthuli Ncube says that the country has the potential to “mobilise 70% of funding needed to finance key infrastructure projects on the domestic market, a situation that would lessen the burden of external debt payments on the State.”
Zimbabwe is currently battling to repay $6.9 billion in external debt of which nearly $2 billion is arrears to global lenders. The arrears have resulted in the country missing out on potential lines of credit and cheaper concessional financing.
"We are thinking of a road to build and the first thing we do, we go outside or try to get a loan"
Ncube believes that by mobilising local market funding, with the balance being fulfilled by external funding, the pressure could be relieved on external repayments. It has been reported by the Ministry that Zimbabwe need approximately $30 billion for infrastructure development.
"We need to strengthen resource mobilisation,” Ncube said. “I am always concerned that we are not doing enough in terms of domestic resource mobilisation. "How often do we do the following? We are thinking of a road to build and the first thing we do, we go outside or try to get a loan and we spend (the little) foreign currency we have or we are borrowing huge US dollar base loan to finance the road and yet we got easily about $5 billion worth of deposits which could be borrowed domestically without increasing any risk in terms of external debt."
In addition to building much needed infrastructure, Ncube believes that the plan can increase employment opportunities for local people and contractors.
"So building these roads and just by doing that we are able to employ local contractors, local skills, but of course we are not saying that we should not infuse that with foreign direct investment- we should.
Ncube was discussing some of the objectives of the Government’s Transitional Stabilisation Programme (TSP) for 2019-2020, which includes improvising the quality of public service delivery and providing critical infrastructure.