Zimbabwe needs US$13 billion — about double its estimated GDP — to revive its dilapidated energy sector, but is still a “long way” from having a normal relationship with the World Bank, a senior bank official said yesterday.
Country director Kundhavi Kadiresan told reporters a lack of clarity over a black empowerment push was also preventing investment in an economy that was nevertheless showing “impressive” growth.
“Institutions like the World Bank and others are really keen to work with the government in terms of getting this country back on track,” she said.
“However, there is still a long way from normal relationship due to arrears and lack of policy clarity.”
A coalition government set up By President Robert Mugabe and Prime Minister Morgan Tsvangirai in 2009 adopted foreign currencies to replace a local unit wrecked by hyperinflation.
Since their introduction, the economy has recovered from a decade of decline, and the government projects it will expand 9.3 percent this year, while inflation is down to single-digits from a peak of 500 billion percent in December 2008.
However, the coalition is sharply divided over economic policy, including how to address Zimbabwe’s defaulted debt and implement a 2008 empowerment law that seeks to compel foreign-owned forms to sell majority stakes to locals.
Zimbabwe’s external debt has risen to US$8.8 billion, with the World Bank and the African Development Bank being owed US$2 billion of that, Kadiresan said.
Kadiresan said Zimbabwe also needed to establish a good record of sound macroeconomic policies before multilateral finance institutions like the World Bank could resume lending to the southern African country.
While lauding the economic progress, Kadiresan said structural problems such as poor infrastructure and power shortages posed a long-term threat to full recovery.
“Zimbabwe needs US$13 billion investment in the energy sector,” she said. “The road network is very good. However the maintenance has been very poor over the past fifteen years and huge investment is also required for the roads.”
Zimbabwe currently generates less than 1,000 megawatts of electricity, about half of its requirements, due to frequent breakdowns at its ageing plants.