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Mthuli Adopts Innovative Approaches For Infrastructure Financing

Mthuli Adopts Innovative Approaches For Infrastructure Financing

Talk of the country selling its airports and highways have been said since the 2024 National Budget presentation, albeit at a low volume as people concentrated on their incomes and the effect of tax on the said incomes.

As we continue unravelling the budget, this week we talk about how Government wants to fund infrastructure and the innovative way he has thought of.

According to the Minister of Finance, Economic Development and Investment Promotion, Prof Mthuli Ncube, Government will expand and modernise funding models that broaden the investor base in flexible and innovative ways such as asset recycling and Public-Private Partnerships (PPPs).

According to Treasury, “the Government will also keep in contact with the private sector regarding the potential concessioning of certain roads through structured finance, especially those that generate adequate cashflows and whose scope of work can be adequately funded through tolling.”

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The budget statement claims that discussions about selling the RGM International Airport, Victoria Falls Airport, and Joshua M. Nkomo International Airport are ongoing.

The newly resurfaced Harare-Beitbridge Road is also on the list. Moreover, the Government is working with Africa 50 to explore project asset recycling as an avenue of financing infrastructure.

This can allow the Government to allocate funds to other important infrastructure projects, which are essential for long-term, steady economic growth.

So this week, we will be talking about asset recycling.

Asset recycling is a financial strategy that involves a government or entity selling existing public assets (wholly or partly), and reinvesting the proceeds into new projects. This approach is designed to leverage the value of current assets to address financial needs or fund new developments.

Like any financial strategy, asset recycling comes with its set of advantages and disadvantages, and its implementation can have far-reaching consequences for a debt-ridden country.  BusinessWeekly

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