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Public infrastructure projects: Why costing is highly critical

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GOVERNMENT should investigate claims that the Mbudzi roundabout traffic interchange project in Harare will cost US$85 million when the biggest similar construction undertaking in Africa — the Mount Edgecombe flyover in Durban, South Africa — cost much less than that.

The Edgecombe interchange, which is the largest is the southern hemisphere, cost R1.14 billion (US$77 million), but it is a world-class infrastructural development. It is futuristic and exudes value for money at that cost.

Not the Mbudzi project. Transport minister Felix Mhona this week said the Mbudzi construction would cost US$85 million and yet it could actually be reviewed, already creating or leaving room for cost escalation or budget overruns, which is what this government usually does when it wants to facilitate corruption.

Such projects are always characterised by bribes and kickbacks initiated by officials and contractors who know that costing is always a problem. The devil lies in the cost. Costing is not entirely scientific, so it leaves room for guesstimates and corruption. The cost of corruption, mismanagement and inefficiency in public infrastructure projects is usually high and damaging to vulnerable countries like Zimbabwe.

Studies have shown that corruption in public procurement comes at a huge price to government, private sector and citizens. It leads to large untold costs on the economy, jobs and lives.

The infrastructure sector is no exception, in fact, it is a haven for this rot — corruption, alongside mismanagement and inefficiency have unprecedented ramifications on the sector’s progress and economy.

In countries like Zimbabwe, huge investment is needed in the infrastructure sector, in fact, around the world, to ensure quality structures can be built to serve the economy, people and communities. Infrastructure — such as roads, bridges, ports, schools, hospitals and utility structures — are critical, as they allow economic agents and citizens to be productive and work efficiently.

As countries try to build new or revamp old infrastructure, global infrastructure output is expected to scale US$17.5 trillion per annum by 2030, which happens to be President Emmerson Mnangagwa’s economic plan timeline — Vision 2030.

If would be such a good coincidence if Mnangagwa’s programme had substance. But then there is a gap in national budgets, particularly in low- and middle-income countries like Zimbabwe, to meet this. Even prior to the Covid-19 pandemic, research from the Global Infrastructure Hub estimated that US$97.5 trillion investment would be needed to meet the Sustainable Development Goals by 2030.

However, investments are likely to fall short of this amount by as much as US$18 trillion. In the process, research shows between 10%-30% of investment in infrastructure could be lost due to mismanagement, inefficiency and corruption.

The International Monetary Fund (IMF) corroborates this, specifying an average global efficiency gap of approximately 30% between the money that is spent, the results and quality of the infrastructure built. To show how serious this issue may be, more recently, the IMF indicated that inefficiency in the sector reaches 53%, and 34% of total expenditure on infrastructure in low-income countries and emerging market economies. This tells us why those involved in this sector easily make money and become rich.

The sector is opaque and a hotbed for corruption. Unless governments, anti-corruption activists and civil society, as well as media, fight to reverse this situation, trillions more will continue be lost annually to corruption, mismanagement and inefficiency. In Zimbabwe, almost all infrastructure projects are opaque, lack transparency and accountability on how they are initiated, cost and monitored.

There is need for oversight to ensure how public money is spent, building trust between citizens and government. Identifying potential efficiency savings and promoting reforms in the management of public finances and infrastructure procurement are critical.

This means that companies bidding for contracts can be confident that the process is taking place in a fair, open and competitive environment. Communities can access work and markets through better roads, drink safe water, be educated in well-built schools and receive medical treatment in safe hospitals without paying exorbitant costs for facilities.

This is precisely the reason the Mbudzi project must be investigated. In fact, there is need to audit all infrastructure projects.

 One would find that Zimbabwe has been prejudiced billions through infrastructure projects alone; money that is far more than what the country is desperately looking for from international financial institutions and other lenders.

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