Mobilisation of financial resources is considered a critical pre-requisite for the successful implementation of the Bank’s strategy and, ultimately, fulfilment of its statutory mandate. The Bank’s resource mobilization strategy is driven by the need to broaden the resource base from which funding is mobilized and also providing value-added services (“additionality”) to enhance the developmental impact of resources mobilized. Inadequate funding is the major contributor to deficient infrastructure and as a Development Finance Institution, the IDBZ seeks to become the main provider of, and conduit for, infrastructure finance in Zimbabwe through effective resource mobilization and provision of sustainable financing solutions. The Bank’s strong collaboration with market players goes a long way in facilitating the mobilisation of the much needed resources for the implementation of priority infrastructure projects.
In prioritizing projects for fundraising, the Bank follows Government’s priority areas which are generally identified as key enablers for inclusive and sustainable socio-economic growth and development, and these include: energy projects (expansion and rehabilitation of generation, transmission and distribution infrastructure); transport infrastructure projects; water and sanitation; ICT (national optic fibre backbone) and housing (basic offsite and onsite infrastructure).
In order to achieve the desired developmental impact, the Bank pursues the following resource mobilisation strategies:
- Capitalisation – a capitalisation roadmap has been developed that seeks to significantly scale up the Bank’s capital base in order to create capacity to co-finance selected projects. The capitalisation roadmap involves selective approaches to local, regional, continental and international DFIs and institutional investors with a shared focus on infrastructure. Having DFIs in the Bank’s shareholding structure will create opportunities for accessing lines of credit, credit enhancements on the Bank’s debt instruments and also provide opportunities for knowledge sharing and technical assistance. A strong balance sheet will be leveraged to raise long term debt and other funding lines from local and international markets to finance priority infrastructure projects.
- Strategic Partnerships - partnerships with regional, continental and international DFIs and Investment Banks to leverage shared technical expertise, arranging and placement capabilities and co-financing opportunities in agreed priority areas. Through these collaborative relationships, the Bank can tap into external capital markets for funding.
- Market-Based Funding – issuance of infrastructure and project bonds to meet medium and long term funding requirements. Since dollarization of the economy, the IDBZ has pioneered the issuance of infrastructure bonds as a mechanism for transforming savings into financing for infrastructure development. Through the issuance of innovative and appropriately packaged instruments, the Bank contributes towards the development of a robust capital market whilst facilitating the implementation of critical infrastructure projects. The Bank’s emphasis remains on structuring bespoke instruments in a way that ensures instrument performance and adequate comfort to investors. The Bank is now working towards an institutional rating from international rating agencies in order to attract a large universe of institutional investors who are required by their mandate to invest in instruments from rated issuers.
- Public-Private Partnerships
The Bank understands that the country’s infrastructure requirements cannot be met from limited public funding and domestic capital markets that are not wide and deep enough. The Bank believes that the private sector can play a critical role in closing the infrastructure gap. To this end, the Bank’s strategy is to establish partnerships with key private sector players in the infrastructure space to create solid platforms and financing structures that catalyze private sector participation in infrastructure development and investment through Public-Private Partnerships (PPPs). With the recent enactment of the Joint Ventures Act (Chapter 22:22) and imminent setting up of a PPP Unit within the Ministry of Finance and Economic Development, Government is putting in place a sound policy and regulatory framework that is designed to increase private sector participation in infrastructure investment and the Bank stands ready to play a facilitative role in harnessing private sector capital and expertise towards infrastructure development.
- Project Preparation Funding
The Bank recognizes that the lack of bankable projects remains a major challenge which militates against efforts to attract investment towards priority infrastructure projects. In response, the Bank has established a Project Preparation and Development Fund (“PPDF facility”) with seed capital of US$2.5million from internal resources as part of the Bank’s intervention to address the early stage project preparation and development funding gap. Through the PPDF window, the Bank will ensure that priority infrastructure projects or concepts are developed to bankability in a timely and transparent manner; and that these can then attract the right levels of investment for successful execution. The Bank seeks to complement these internal resources with external resources from international development partners to attain a level of US$10 million in the medium term. The Bank is also making efforts to guide the market in embracing best practice project preparation and procurement processes that are critical for the packaging of bankable infrastructure projects that can attract investment.
The Bank’s Resource Mobilisation initiatives are anchored on strong client relationships, innovation, deep understanding of the project life cycle, strong stakeholder engagement and an unwavering commitment to deliver sustainable funding solutions for infrastructure development in support of national socio-economic developmental objectives.