Transcript Proposed Marketing & Advertising Campaign For House of Kumali

REGIONAL INTEGRATION OF
INFRASTRUCTURE: BRINGING
EFFICIENCIES TO SERVICE
DELIVERY IN THE REGION
Presentation to the Zimbabwe Mining Indaba
2013, 25 – 27 September 2013
N. Nyamambi
CONTENTS
• ROLE AND IMPORTANCE OF
INFRASTRUCTURE
• STATUS OF THE INFRASTRUCTURE
• THE REGIONAL INITIATIVES
• THE PROJECTS
• FUNDING CHALLENGES
• POSSIBLE SOLUTIONS
• CONCLUSION
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ROLE AND IMPORTANCE OF
INFRASTRUCTURE
Infrastructure is a catch-all term used to describe everything that
surrounds or supports the basic operations – roads, power, water,
communications, housing and others
Studies have shown that inadequate infrastructure leads to
production inefficiencies and high costs of doing business. This
varies from operation to operation & is largely dependent on location
Development of reliable, affordable & adequate infrastructure
contributes significantly to the efficient and effective functioning of
the economy.
The region in general has been characterised by lack of investment
in new capacity and inadequate maintenance of the existing
infrastructure
STATUS OF REGIONAL
INFRASTRUCTURE DEVELOPMENT
Economic growth & productivity in the region is
hampered by infrastructure related problems, the
main ones being:
• Insufficient energy supply – region characterised
by inadequate generation capacity to meet current
demand
• High transport (rail & roads) costs – poor &
unreliability state of transport network
• Lack of low cost access to information and
communications technologies
THE SADC REGIONAL
INFRASTRUCTURE DEVELOPMENT
MASTER PLAN
1. In response to these challenges, SADC crafted the
RIDMP, aimed at constituting the Infrastructure
Development Blueprint to year 2027.
2.
3.
4.
RIDMP is divided into three phases, with Phase 1 (20132017) as the Short Term Action Plan (STAP). Priority is to
consider projects in five key sectors – transport, energy,
ICT, tourism and water.
STAP is meant to cater for those projects ready for
implementation whilst starting preparation for projects to be
implemented in phases 2 and 3
Financial requirements of STAP projects is estimated at
US$64 billion
STAP PROJECT BRIEFS
1. Because of its strategic geographical location,
Zimbabwe is the natural home for most projects
envisaged in the Master Plan and these include:
2. Hwange Power Station 7 & 8 Expansion Project –
estimated to cost US$1.1bn. Project development is
scheduled for completion in 2017.
3. Gokwe North Power Station – a greenfield project
estimated to cost US$2.2bn. The feasibility studies
currently being updated.
4. ZIZABONA Transmission – investors’ round table
was held and MoU signed. Estimated cost is
US$223m.
PROJECT BRIEFS cont:
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Beitbridge – Chirundu Road – estimated to cost at least
US$1bn., depending on option adopted. Feasibility studies
completed and project ready for implementation once funding is
raised.
Beitbridge Border OSBP – the upgrade and expansion of
infrastructure at the border post at an estimated cost of US$6
million.
Plumtree – Bulawayo – Gweru – Harare – Mutare Road –
rehabilitationof the Highway at a cost of US$206 million. This is
work in progress.
National Railways of Zimbabwe - revival of the national rail
utility at a cost of US$200 million. Feasibility studies undertaken.
Projects outside Zimbabwe include Inga III Hydro Power Project in
DRC (US$1.7 bn), Cahora Basa North Bank Power Station in
Mozambique (US$800m)
FUNDING CHALLENGES
Against these huge financing requirements for identified
regional projects, the major hurdle to move forward
becomes the financial constraints. The region is
characterised by:
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Shortages of long term funding due to limited domestic
capital markets
Institutional capacity constraints – e.g. weak balance
sheets of most would be lenders
Lack of funding fro project preparation and packaging and
therefore inability to fund feasibility studies and other work
necessary to develop projects to bankability stage
Regulatory environment in some member states not
conducive to encouraging new private sector players to
participate in infrastructure investment
POSSIBLE SOLUTIONS
• Against the challenges highlighted above there is need for a move
towards a more regional capital market for the benefit of
governments & private sector borrowers seeking to raise capital
• Since the formulation of the Master Plan efforts are already
underway to accelerate investment in infrastructure in SADC
through sustainable funding .
• Discussions are going on around the formation of a SADC
Development Fund. This will later be turned into a regional
development bank.
• The Fund will have an infrastructure window to provide financial
support for the implementation of regional infrastructure projects.
• It is envisaged that the Fund will start with seed capital of US$1.2bn,
with the shareholding comprising member states (51%), private
sector (32%) and cooperating partners (12%).
• Also on the cards is the establishment of a regional Development
Bank supported by BRICS.
THE CAPITAL MARKETS
• Efficient capital markets are as an important integral part of infrastructure
development, especially with regard the raising of long term funding.
• Benefits of well developed capital markets include higher levels of capital
growth, direct access by borrowers of funds from multiple investors,
effective and efficient allocation of funds and attraction of long term
financing ideal for infrastructure
• It is necessary therefore for regional players to promote the development
of an effective bond market, with highly liquid government bonds as
precursor for other private sector bonds
• The fundamentals for accelerated development of bonds markets include
a sufficiently wide market with a variety of instruments available, there
must be depth in the market and well developed market infrastructure
• On the local scene, IDBZ has taken the initiative to revive the domestic
bonds market by successfully issuing the maiden Infrastructure
Development Bond proceeds of which were advanced to ZETDC to
finance a Prepaid Meter Project.
• The Bank will continue to engage all stakeholders in working towards the
reviving the once vibrant capital market
• In addition, the Bank will engage its strategic regional partners - the
DBSA, AfDB and others to cooperate towards achieving this goal of a
vibrant regional financial sector.
CONCLUSION
• Considerable ground has been covered, but there is scope for efficiency
improvement
• The sizes of individual economies tend to limit the extent of capital
markets development, and hence the need for an integrated regional
capital market
• It is imperative that financial sector regulators and market players work
together towards the fulfillment of this noble objective.
THANK YOU