INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE

1. INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE DRAFT SPEAKING NOTES FOR USE DURING THE PANEL DISCUSSION Assessing the Current State and Prospects of NDBs in Fostering Economic Development and Achievement of SDGs Kigali Convention Center, Kigali, Rwanda 12th June 2019

2. About IDBZ • The IDBZ is a Development Finance Institution (DFI) in Zimbabwe. • It was formed in 2005 and operates under the IDBZ Act. • Its core mandate is infrastructure development through: mobilization of resources; capacity building; and knowledge generation and sharing in support of national efforts for inclusive socio-economic development there by contributing to SDGs. • The Medium Term Strategy of IDBZ is guided among other government policies by the Country’s vision 2030 and the United Nations’ 2030 Agenda for Sustainable Development Goals (SDGs). • Infrastructure has been identified by both the World Bank and the African Development Bank as a key enablers for sustainable and inclusive socio-economic development. • IDBZ directly contributes to SDG Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation. • This will facilitate achievement of the ultimate SDG goal 1 of ending poverty. • IDBZ projects are spread through the country and even in remote areas.

3. ICT Communication systems -Telephones Lines -Internet Services Housing- -Water, Sewer & -Electricity Add Student accommodation Energy: power plants -Transmission lines -Renewable Energy -Solar projects Water & Sanitation Dams -Irrigation Treatment Plants -Sewer Transport -Roads -Airports -Rail Urban link roads IC Idbz’s key sector of concentration

4. Cost to the Economy Why lack of Infrastructure Compromise SDGs • High cost of production • Reduced productivity Compromised SDGs • Lack of infrastructure that is: • Adequate • Reliable • Affordable • Sustainable Leads to Leads to Lack of competitiveness & low investment Reduced Employment Opportunities • Reduced revenue for the fiscus

5. NOTABLE PROGRESS MADE BY DFIs (Zimbabwe experience) Mandate alignment • The Mandate has been realigned to reflect the development nature of the Bank and to support achievement of national goals, SDGs and issues to deal with Climate Change. The Bank is advanced towards its formal accreditation under GCF. The Bank’s governance and internal processes have been revamped to reflect international best practices. Governance Strong pursuit of capitalisation The bank is targeting to become a $1 billion bank in the medium to long term through bring in other strategic institutional investors who share the same developmental mandate to facilitate access to long-term capital . Pursuit of sustainability The Bank’s primary objective is developmental. However to sustain its operations, the Bank priority funding those projects that have both developmental impact and implements them in such a way as to sustain its operations. This will prevent high dependence on share holder allocation

6. NOTABLE PROGRESS MADE BY DFIs (Zimbabwe experience) Robust Monitoring Framework The Bank has put in place a robust Monitoring framework that tracks intermediate development outcomes in form of infrastructure assets and also internal efficiency. This framework is aligned to the AfDB framework Use of Domestic Resource to finance infrastructure The Bank is partnering well with the local pension and insurance industry to finance long term infrastructure projects in particular in the housing sector including Students accommodation. Ro-bust advisory services and capacity building The Bank provides strategic advisory services to Government in the implementation of key national strategic infrastructure projects funded through the Public Sector Investment Programme Climate Initiatives The Bank is advanced in fulfilling requirements of climate funding platforms e.g. GCF, IFC/World Bank and is building expertise in packaging of green projects, with particular focus on mainstreaming of climate and gender issues.

7. Notable Challenges affecting DFI: Zimbabwe experience • Lack of long-term funding due to depressed savings • Limited access to Bank projects and hence the Bank has created a PPDF to assist through various stages of infrastructure project preparation and developments • Legislative delays by regulators in approving various request by the Bank in areas such as: • Licensing • Project designs and drawings • Environmental certificates • Procurement challenges • Limited share of public resources towards capital projects including infrastructure. More-orientation towards re-current expenditure. Most African countries allocate less than 4% of their GDP to infrastructure. This is a big challenge. SA and Botswana are doing well at above 7% of GDP. • Absence of key partners to compliment Government efforts in terms of share holding structure and direct funding of infrastructure projects. • Small asset base and capitalization limiting the Bank’s capacity to underwrite big infrastructure projects. • The unstable macro-economic challenges including shortages of foreign currency.

8. Key challenges why DFIs in Africa are finding it difficult to attracting Capital • Most countries in Southern Africa score poorly (below 50%) in terms of both • Short Term Economic Risk Perception • Political Risk Perception • Operational Risk • Country Risk • Southern Africa is still performing poorly than global average. • This trend has to be reversed in order to attract both domestic and Foreign Investments.

9. Opportunities and prospects for DFIs • Commitment by Governments to promote development through increasing the share of capital budget versus re-current expenditure will make it ease for DFI to access public resources for development. • Engagement with the international community aimed at address debt arears clearance is critical. For Zimbabwe, this is work in progress and once resolved, it will unlock significant resources towards infrastructure as IDBZ will pursue aggressively engaging foreign DFIs and Multilateral Institutions for infrastructure funding lines. • Dealing with external operating environment and addressing the ease of doing business in particular with regards to the regulatory framework will improve attract other private institutional investors in infrastructure delivery. • IDBZ believes Co-operating partners including UN agencies can play a critical role in promoting sustainable development through blending grant resources and interest bearing instruments to lower the cost of financing development projects. The EU is already doing this under the 11th EDF through working with certain DFIs to finance infrastructure projects in the SADC and COMESA region. • There is a need to take advantage of various sources of potential resources in Africa to finance development projects through DFIs.

10. Financing Prospects in Africa that can be delivered through DFIs

11. The IDBZ is looking to play a key role in SDGs and seeks support from potential investors and Cooperating Partners. THANK YOU IDBZ Contact Details: The Chief Executive Officer Infrastructure Development Bank of Zimbabwe IDBZ House, 99 Rotten Row Road, Harare, Zimbabwe Tel: +263 4 750171-8 Email: enquiries@idbz.co.zw