ZIMBABWE‘S INFRASTRUCTURE: A CONTINENTAL PERSPECTIVE Given the magnitude of the burden, some less ambitious infrastructure spending scenarios were also considered. An intermediate scenario considers a somewhat less ambitious set of infrastructure targets and greater reliance on lower-cost technologies and brings the overall spending needs down to $1.7 billion annually, which would still represent about 39 percent of the 2009 GDP. A minimalist scenario considers only rehabilitation and maintenance expenditure for existing assets with no new investment. This would bring costs down to $1.2 billion annually, still absorbing 28 percent of the 2009 GDP. These scenarios illustrate that the bulk of the spending needs have to do with addressing the neglect of recent years, and that even this apparently modest objective hardly looks affordable when viewed against the contraction of GDP that has taken place over the intervening period. As of today, the country seems to find itself in the difficult position of having more infrastructure assets than it can afford to sustain.

Zimbabwe already spends around $0.8 billion per year on infrastructure between government budget, parastatal companies, donor spending, and foreign direct investment (FDI). This is already equivalent to about 18 percent of the 2010 GDP and indicates that the country strives to improve the state of its infrastructure. This spending takes place against a broader macroeconomic backdrop of sharply declining gross domestic investment, which fell from 19 percent of GDP in 2000 to 3 percent in 2006.

What is particularly striking is that $0.7 billion a year is being lost to inefficiencies of various kinds, which is almost as much as total current spending and amounts to almost 16 percent of GDP. The main sources of inefficiency are underpricing in the power, water, and roads sectors and poor financial management of utilities. If Zimbabwe could raise tariffs to cost-recovery levels and align operational inefficiencies with reasonable developing country benchmarks, these measures alone would almost double the existing flow of resources to the infrastructure sectors.

Assuming that the inefficiencies could be fully captured, an annual funding gap of $0.6 billion per year would remain for the full set of infrastructure spending needs. The funding gap would drop to $0.4 billion per year for the intermediate investment scenario, and further fall to $0.1 billion under a minimalist spending scenario. By far the largest gaps exist in the power and water sectors. Zimbabwe has the potential to close this gap by raising additional public funding for infrastructure from increased fiscal receipts of various kinds, particularly when the international sanctions are lifted. Furthermore, Zimbabwe has not captured as much private financing for infrastructure — as a percentage of GDP — as many of its neighbors have succeeded in capturing so far. This scope for improvement, coupled with the prospect of economic rebound and prudent policies, should help the country to regain its historic advantages in infrastructure.

# The continental perspective

The Africa Infrastructure Country Diagnostic (AICD) has gathered and analyzed extensive data on infrastructure in more than 40 Sub-Saharan countries, including Zimbabwe. The results have been presented in reports covering different areas of infrastructure—information and communication technology (ICT), irrigation, power, transport, water and sanitation—as well as various policy areas, including investment needs, fiscal costs, and sector performance.

2