Omega Ukama 
ZIMBABWEAN local authorities have been urged to embrace innovative fundraising tools available in capital markets to address the nation’s crumbling infrastructure.
Efforts to improve the quality of roads, power supply, and basic services are seen as central to the country’s economic growth.
“Evidence from other economies clearly demonstrates that capital market financing is instrumental in driving sustainable economic growth and development for most economies through funding infrastructure, road and rail rehabilitation, power supply, water and sewer reticulation. “Zimbabwe is no exception! It can be done,” said Kundai Msemburi of the Securities and Exchange Commission of Zimbabwe.
Speaking to local authority officials at a conference hosted by the Institute of Chartered Accountants of Zimbabwe in Masvingo last week, Msemburi outlined the range of financial instruments available, including, debt, equity, and hybrids.
Alternative products like Real Estate Investment Trusts (REITs) are further options, Msemburi said.
These instruments could finance crucial infrastructure upgrades while potentially restructuring state enterprises, he urged.
Success stories abound elsewhere. Mexico’s toll road infrastructure was built with bonds that captured future revenue streams. Likewise, South Africa’s renewable energy program has leveraged capital markets.
China’s high-speed rail network was heavily funded with bond issuances.
Zimbabwe’s capital markets have traditionally relied on conventional equity and debt instruments. However, there’s increasing interest in and gradual adoption of non-traditional fundraising instruments. This shift is driven by the need for alternative finance sources as the nation tries to tackle its infrastructure and economic development challenges.
While capital markets offer significant potential, local authorities in Zimbabwe may face several hurdles such as market maturity, investor confidence and capacity building.
Zimbabwe’s markets must mature to handle complex infrastructural financing deals, while economic instability and “the lack” of a conducive regulatory environment could attract investors to potentially risky infrastructure investments.
Local governments may also need to develop financial expertise in structuring and managing capital market transactions.
Reliance on government budgets and diminishing international aid sources means local authorities must become proactive in financing essential services.
“Waiting for central government handouts is not sustainable,” commented a Harare-based infrastructure consultant, who requested anonymity.
“If local councils manage projects transparently and in a way that safeguards investor interests, capital markets can be a powerful tool for Zimbabwe’s development.”
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