Home » Industry » IDBZ to Float U.S.$100 Million Housing Bond

THE Infrastructure Development Bank of Zimbabwe intends to float a $100 million bond for housing development, chief executive Mr Charles Chikaura has said.

IDBZ has acquired “sizeable” pieces of land in Harare and has been granted the necessary approvals by the Ministry of Finance and Economic Development to issue tax free debt instruments to raise funding.

“The IDBZ intends to raise $100 million through the issuance of Housing Development Bills and Bonds to finance working capital and capital expenditure requirements towards this initiative,” Mr Chikaura told The Herald Business on Wednesday.

“To ensure that the proposed instruments receive the desired support from local and foreign investors, the bank is also approaching regional development finance institutions such as PTA Bank, Afreximbank and African Development Bank to seek support for this initiative through co-financing and credit enhancement arrangements.”

Mr Chikaura said the projects would provide housing for the low to middle income groups, with a bias towards the civil service. Subject to additional land being available, the bank plans to implement similar projects in other cities countrywide.

Zimbabwe is faced with a significant housing backlog. The housing shortage is estimated at 1,25 million units which translate to a national backlog of five million citizens or more than 40 percent of total population.

Housing finance schemes which are currently available have little incremental effect on the national housing stock as these are either exclusively packaged for a few targeted groups or are priced beyond the reach of the poor.

Under Zim-Asset, Government intends to reduce housing backlog through the provision of serviced land, strengthen public private partnerships and adoption of new building technology.

The Government will also strengthen community-based housing organisations, strengthen micro-housing finance institutions and adopt densification (vertical expansion).

Despite the numerous challenges that the IDBZ is facing in the form of inadequate capitalisation and being an Office of Foreign Assets Control designated entity, the bank has recorded some positive achievements in the last three years.

These include the successful capital raise by way of a bond issue to finance the Zimbabwe Electricity Transmission and Distribution Company’s prepaid metering power project to the tune of $30 million.

The bank has also managed to overcome several challenges and has consistently posted profits since dollarisation in 2009 and has paid dividend to shareholders since 2011. The IDBZ again expects to post another profit for the financial year ended 31 December 2013.

Source : The Herald