Zimbabwe raises US $120m for phase 2 of ERRF project

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Zambia has managed to raise US $120m out of the targeted US $150m for the second phase of the Emergency Road Rehabilitation Fund (ERRF).

LISTED financial services group, ZB Financial Holdings Chief Executive officer, Mr Ronald Mutandagay, confirmed the reports and said that the US $150m road infrastructure deal was making an instant improvement in the country’s road network.

“So far we have drawn down US $120m of the US $150m resource envelope to spruce up the country’s road network which has been excessively damaged by rains over the years,” said Mr. Ronald Mutandagay.

Also Read:Nigeria to inject US $274.6m Sukuk bond into road construction

Zinara bond

The Zinara bond which was spearheaded by Government was meant for sprucing up the country’s road network, half of which was damaged by rains over the past years. The financial services provider was retained by the Zimbabwe National Road Administration (Zinara) as lead advisory for the ERRF after it raised US $105m in the first round of the fund.

Phase one of the programme focused on preserving the integrity of the existing road network by rehabilitating the drainage system, patching potholes, clearing culverts and repairing bridges whilst the second phase involves periodic maintenance and resurfacing and the third phase would include the construction of new roads and dualisation of some major roads across the country.

“We expect the balance to be utilised year end though the cost will rise a bit due to the fact that the rainy season has kicked off as it is costly to resurface roads during the summer season,” said Mr. Mutandagay.

Zimbabwe’s biggest constrain

According to experts, the biggest constrain in achieving the economic target for Zimbawe is its infrastructure.  In the African Development Bank (AfDB’s) flagship study on the state of Zimbabwe’s infrastructure, there has been a decline of the proportion of fair to good road condition from 73% in 1995 to 60% to date. The  dilapidated infrastructure has largely curtailed foreign direct investment (FDI) flows into Zimbabwe, especially as it drives up the cost of doing business.

Zinara collects over US $150m annually from road access fees, vehicle licensing fees, transit fees and fuel levy, among other revenue streams. Mr Mutandagayi said the financial institution together with its partners plan to raise US $350m next year for road rehabilitation. Additionally, ZB and a South African company, Neo Capital, have signed a $1 billion deal to transform the country’s road network in the next two years.