Govt spending on infrastructure spurs local industry

The Chronicle

MASSIVE infrastructure projects being carried out by the Second Republic across various sectors have excited local industry, which is reaping huge profits from the increased Government supply and construction contracts, the Confederation of Zimbabwe Industries (CZI) said on Friday.

Guided by robust economic blueprints including the National Development Strategy 1, the Government has, since 2017, embarked on unprecedented  infrastructure development in line with its aspirations to transform the country into an upper-middle-income economy by 2030.

In the transport sector, for example, the Harare-Masvingo-Beitbridge Highway, Beitbridge Border post, and Robert Gabriel Mugabe International Airport, are being upgraded to modern standards, while massive dam projects, including the Gwayi-Shangani, Kunzvi, and Semwa are also  coming up.

Treasury has allocated ZW$156,4 billion to support infrastructure projects this year alone. A glance at the financial results of various local construction and material supplying firms reveals the positive financial impact on their balance sheets the Government projects are having. For example, last week, cement manufacturer, Pretoria Portland Cement reported a 25 percent increase in its annual local cement sales, attributing its good showing largely to swelling demand from Government projects.

On the other hand, construction company Masimba Holdings reported that it had secured projects worth US$214 million last year, up from US$72 million the previous year.

“Government’s renewed interest in infrastructure development was the key driver of growth for the road and earthworks order book,” Masimba, one of the companies working on the Harare-Masvingo-Beitbridge road, said last week.

In an interview, CZI president Mr Kurai Matsheza said the infrastructure construction boom was good for local industry.

“We are excited. We are seeing fantastic (financial) results, and I am sure as the reporting season goes on, the numbers will be even more exciting,” he said.

“We know there has been quite some  spending on roads, dam building and housing as well, so the companies we are talking about are suppliers to those specific sectors so their revenues would obviously grow tremendously, but it is a good development. As a country, we need infrastructure.”

Matsheza said downstream industries were also benefiting from the Government-led infrastructure development.

“When Masimba for example, is building houses, Turnall, which is on the roofing side will benefit, the guys on the timber side will also benefit, the guys on the piping side, will also benefit and maybe even the workers working for those companies also benefit on the welfare side,” he said.

But, he urged the Government to continue avoiding printing money to finance the various infrastructure projects.

Several of the projects, including the Harare-Masvingo-Beitbridge road, are being financed by domestic resources from the national budget.

“On the side of caution, there is the question of how does the Government pay these guys, and where does the Zimbabwe Dollar that is  paid to these guys end up? Our argument has always been that the Zimbabwe Dollar will find its way to driving the parallel market and we  need to be proven wrong,” Matsheza said.

The construction boom has also spurred rapid expansion in the local industry.

For example, Turnall, which manufactures roofing sheets, pipes, and other associated construction materials, is setting up a new glass-reinforced plastic plant to meet the rising demand for public projects.

The massive infrastructure rehabilitation and construction also includes that for electricity, information and communication technologies, water and sanitation, and healthcare. – New Ziana

Article Source: The Chronicle

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