Harare – The Infrastructural Development Bank of Zimbabwe (IDBZ) recorded a loss of ZWL$866 million for the year 2019 on the back of a challenging macro-economic environment – ENN reports.
In his statement, IDBZ chief executive Thomas Sakala highlighted that total assets for the bank declined by 64.4% from ZWL$3.7 billion in 2018 to ZWL1.3 billion as at 31 December 2019 due to continued depreciation in the value of Zimbabwe’s local currency. “The bank’s revenue grew by 1.3% from ZWL82.4 million in 2018 to ZWL83.5 million in 2019”, Sakala further said. He attributed this revenue growth to a strong performance on fee and commission income which grew by 91.8% from prior a year figure of ZWL21.8 million to ZWL41.7 million.
Zimbabwe’s infrastructural projects, which depend on long term investments, were hard hit by the macro economic developments that started in October 2018 when Finance Minister Mthuli Ncube introduced a 2 percent tax on all mobile transactions as the state eyed a greater share of the earnings from use of the expanding technology. This tax law on mobile transactions increased the levy from a fixed cost of ZWL0.05 per transaction to 2 percent of the value of each transaction. Consequently, commodity prices shot up. Follow up policies, including liberalisation of the exchange rate between the bond notes and the United States dollar in February 2019, and the introduction of a local currency in June 2019 through a statutory instrument (SI142) led Zimbabwe into a hyper inflationary mode. The infrastructural sector was not spared as construction projects were halted by contractors due to uncertainty.
By August 2019, the inflation rate in Zimbabwe was recorded an inflation rate of 288.50 as food prices surged more than 390 percent. It is estimated that 90% of construction projects in Zimbabwe were put on hold between June 2019 and December 2019, with IDBZ also putting on hold over 40 projects of its 2019 projects, ENN is reliably informed.
For Zimbabwe to close its infrastructural gap, a key catalyst to the realisation of its vision 2030, the country requires about US$3.4 billion per year for 10 years from 2020, according to a 2019 African Development Bank (AfDB) report. Therefore, the Zimbabwe Government must fully support IDBZ’s construction projects in the housing, road, water and sanitation sectors of its economy to make vision 2030 a reality.