ZIMBABWE’S roads administrator revealed on Tuesday that it had re-engaged the Development Bank of South Africa (DBSA) to review terms of a US$206 million loan granted about seven years ago, following a string of defaults.
Zimbabwe National Roads Administration (Zinara) chief executive Nkosinathi Ncube told reporters that Harare had accepted a bad deal, which resulted in the agency struggling to service the “expensive loan”.
DBSA took the risk to extend US$206 million to Zimbabwe, which was undertaking its first major road revamp in decades, even as the rest of regional and global lenders turned down the deal citing high risk.
Ncube indicated that behind the newly tarred fine lanes of the highway, a huge battle to pay off the loan was brewing, with Zinara being classified among big defaulters for some time.
He said after the DBSA classification, his new executive approached the regional lender for a reconsideration of payment terms.
“There were no (time limits) to the loan,” Ncube said.
“We were told (by government) to readjust the loan. The loan was useful because it gave us roads, but it was an expensive loan. That is why we have been rectifying it so that the South African bank does not red flag us. We went into the red (list) already but we have regularised it,” he added.
Asked if Zinara will be able to service the debt, Ncube said capacity to pay would depend on tariff rates approve by government.
Zinara generates its revenue through a network of tollgates along the country’s major highways.
It projects to collect $34 billion this year, with a significant part of it earmarked for servicing the loan.
“As long as we have competitive tariffs we will be able to pay the loan and open doors for more,” he said.
Several official reports have indicated that Zinara has been a victim of bad contracts, including a key deal signed with Univern, the firm that owns the infrastructure on which the agency’s system operates.
Ncube said the contract with Univern benefited the latter more, at the expense of the roads administrator.
“We have attended to the Univern contract,” Ncube told reporters. “The contract is being attended to, to take into account the benefits to Zinara. Within a few months, a proper contract will be issued,” he added.
Zinara is doubling to $17 billion allocations to 93 roads authorities this year to quicken reconstruction efforts, which have become crucial following seven years of extensive destruction.