Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube has called on investors to come up with new financing models to fund the country’s infrastructure development programmes.
This would mark a shift from the past reliance on short-term funding, which has been blamed for destabilising the Zimbabwean dollar.
Previously, contractors receiving short-term funding would reportedly exchange it for foreign currency on the black market, leading to fluctuations in the exchange rate.
“Let us be innovative in infrastructure financing,” Minister Ncube said at a high-level Zimbabwe Investment Summit in South Africa on Friday.
The summit, organised by Government and African Chrome Fields, was attended by various Government ministries, agencies, the Reserve Bank of Zimbabwe, and the private sector.
Minister Ncube highlighted various financial instruments as potential solutions, including catastrophe bonds, green bonds, infrastructure bonds, diaspora bonds and SME infrastructure bonds.
He said the Government intended to support these private sector initiatives while attracting more private investment through public-private partnerships (PPP).
Some analysts say Minister Ncube’s call for innovation suggests Zimbabwe is looking to move away from traditional financing methods and explore alternative tools to achieve sustainable infrastructure development.
Minister Ncube emphasised the Government’s commitment to strengthening the economy through the recently introduced structured currency, the Zimbabwe Gold.
The currency is anchored on various policy measures, including adoption of a market-determined exchange rate system, efficient and optimal money supply management, anchoring local currency on reserves backed by gold and foreign currency balances and other support measures and obligations responsive to market demands.
By implementing the reforms alongside innovative financing models, Zimbabwe hopes to achieve sustainable infrastructure development and economic stability, he said.
“It is envisaged that implementation of the policy measures will provide some resilience in the economy against both domestic and global shocks and headwinds, and ensure a continuous downward trend in inflation,” said Minister Ncube.
The gold coins, digital gold tokens, and US dollar-denominated instruments introduced would complement the currency reform recently introduced in Zimbabwe to continue to provide an alternative retail investment product for value preservation in the multiple currency system and a liquidity-mopping instrument over and above the foreign exchange auction system, he said.
“These policy measures will continue, albeit being subjected to constant reviews in sync with inflation to balance macroeconomic stability while also boosting industrial activity and economic growth,” said Minister Ncube.
Turning to the financial markets, Minister Ncube said the market was open to all investors, issuers, market intermediaries, foreign and domestic, including
Zimbabweans in the Diaspora.
The establishment of the Victoria Falls Stock Exchange (VFEX) as a part of an International Financial Services Centre, characterised by lower trading fees, no capital gains withholding tax and lower dividend withholding tax for investors, had already seen several listings on the exchange.
In addition, the introduction of US dollar-denominated exchange would also assist investors, especially the diaspora family, who continue to contribute towards the country’s infrastructural rehabilitation efforts and provision of other basic utilities.
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