Zimbabwe is modernising the Beitbridge border post and the Beitbridge-Harare-Chirundu highway, two crucial infrastructure projects that are key to enhancing trade and improving the ease of doing business in the region.
The Beitbridge border post is the busiest road border post in the Southern African Development Community (SADC), serving not only traffic from Zimbabwe and South Africa but also long haul vehicles from the SADC countries of Malawi, Zambia and the Democratic Republic of the Congo (DRC).
It is a major cash cow for Zimbabwe, usually handling about 170,000 people, 2,100 buses, 25,000 private cars and 15,000 trucks every month, although numbers have been reduced during the Covid-19 pandemic. Approximately 70% of the Zimbabwe Revenue Authority’s revenue collections normally come from the border post.
However, problems at the border are mounting due to a chronic lack of investment, with decrepit infrastructure and corruption leading to delays of up to five days and lost business as traders seek alternative routes.
Upgrading the border crossing
The border is now being upgraded in a $300m project led by Zimborders, an international consortium comprising South African infrastructure investors Pembani Remgro Infrastructure Fund and Harith General Partners, and a Zimbabwean consortium and lead sponsors fronted by Francois Diedrechsen and Glynn Cohen of the La Frontiere Group.
Zimborders won the tender to upgrade the border in 2018 under a build, operate and transfer arrangement, giving it the right to administer the border for 17-and-a-half years after project completion. Work is being carried out in phases so as not to hamper current border activities and is expected to be completed in 24 months.
Zimborders CEO Francois Diedrechsen says the project is being debt funded by a syndicate of South African commercial banks including Rand Merchant Bank, Absa Group, Nedbank and Standard Bank, as well as development finance institutions including the African Export-Import Bank (Afreximbank) and Emerging Africa Infrastructure Fund. Equity financing is being provided by the La Frontiere Group.
“The project attained financial closure on 26 November 2020 and funding of the $300m is made up by debt financing of $220m and $80m equity financing,” he says.
The full scope of the project includes the design and construction of three new terminal buildings as well as warehouses and other small buildings at the border. Other works include a new fire station, a development of 220 government houses, an oxidation dam and water reservoir, and a plant and animal quarantine centre.
Diedrechsen says $55m has been spent to date on preliminary project work.
“In total approximately $55m has been released but a large portion of that money is for advisor fees, lawyer fees, diligence fees, and reserve fees in case there is a period when you don’t get enough traffic to pay for your debt.”
Out of the $55m, $20m is for completed work. In early March, Afreximbank committed a $70m loan facility to finance the project. Afreximbank says that the modernisation will significantly reduce costs associated with traffic delays, and increase intra-regional trade in the Southern Africa region.
Zimbabwe has also begun work to rehabilitate and widen the Beitbridge-Harare-Chirundu highway, one of the major Southern African trunk roads connecting Zimbabwe, Zambia, Malawi, DRC and South Africa.
The road had been dogged by high fatalities as a result of its narrowness and the presence of potholes, factors gradually worsened by an increase in traffic. An over-reliance on road transportation has caused an accelerated depreciation of the country’s road networks.
In 2016, Austrian firm Geiger International was contracted to upgrade the road under a build, operate and transfer model. The company failed to make progress on the project, leading the government to reassign the tender to five local contractors, Bitumen World, Fossil, Masimba, Exodus and Tensor.
A 2021 Infrastructure Investment Programme document released by the Ministry of Finance in December showed that the government has paid ZW$5.8bn ($16m) to the contractors, which by that point had completed work on 154km of the 584km stretch between Beitbridge and Harare.
“We are widening the road to Southern Africa Transport and Communication Commission standards,” says Thedius Chinyanga, permanent secretary at Zimbabwe’s Ministry of Transport and Infrastructural Development. “The road is 584km up to Harare Post Office. Our target was to complete 200km by December 2020, but we missed the target by nearly 50km. Our target again this year is to complete 200km.”
He says a traffic count done in 2017-18 indicated that about 2,800 vehicles used the road per day. The modernisation of the road is expected to reduce accidents and increase trade and tourism in the region.
The road is being paid for from public funds but given spending priorities in the era of Covid-19, government is now moving to raise the finance outside of fiscal revenue, specifically through the fuel levy, Chinyanga tells African Business.
In March, Chinyanga announced that the government will soon float an infrastructure bond issue for $250m to finance rehabilitation and further construction on the highway.
In January, the government declared a national disaster on the state of the country’s roads in order to raise funds to ensure that the most critical roads are attended to.
Large gap remains to be filled
Desiderios Fernandes, the president of the Federation of Clearing and Forwarding Associations of Southern Africa, says the upgrading of the two infrastructure projects is most welcome.
“Any development in a regional route which facilitates trade and the movement of goods is more than welcome to us as private stakeholders because they need to reduce all the bottlenecks to business and improve efficiency in services,” he tells African Business.
While positive, the projects will only scratch the surfaces of Zimbabwe’s huge infrastructure needs after decades of chronic underinvestment. A 2019 African Development Bank report projected that Zimbabwe needs about $34bn to close its infrastructure gap over 10 years, a total which is far beyond the government’s current means.