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Zimbabwe Utility Prices Unsustainable
World Economy

Zimbabwe Utility Prices Unsustainable

Zimbabwe is losing about $1 billion annually on infrastructure deficiencies and current expenditure on development is not enough to encourage the country’s economic recovery, the African Development Bank (AfDB) said Thursday.
Presenting a paper at the 5th Buy Zimbabwe summit in Victoria Falls on Wednesday, AfDB resident country representative for Zimbabwe Mateus Magala said addressing Zimbabwe’s infrastructure challenges will require sustained expenditure of almost $2 billion per year over the next decade, InsiderZim reported.
“Zimbabwe spends around $0.8 billion per year on infrastructure between the government budget, parastatals, donor spending, and foreign direct investment. About $0.7 billion a year is being lost while infrastructure needs an estimated at $14 billion to 2020 with heavy emphasis on rehabilitation, more than half of which is needed for the power sector,” said Magala.
“The main sources of inefficiency are under pricing in the power, water, and roads sectors and poor financial management of utilities. If Zimbabwe could align operational inefficiencies with reasonable developing country benchmarks, these measures alone would almost double the existing flow of resources to the infrastructure sectors.”
Magala said the country’s poor spending on infrastructure comes against a macroeconomic backdrop of shrinking GDP per capita by an average of over 40% between 1990 and 2010, and further sharp declines between 2009 and 2012 to present.
Closing the infrastructure gap would add 2.4% to the annual country’s GDP growth, he said, adding urgent action to address the challenges was needed.
He said in Africa, four percent of the GDP is invested in infrastructure, compared to 14% for countries like China.
With adequate infrastructure, African firms could achieve productivity gains of up to 40%, he concluded.

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