By JUDITH NAMUTOWE –
THE Lusaka South Multi-Facility Economic Zone (LS-MFEZ) Limited intends to seek alternative sources of finance to fully implement the infrastructure roadmap in the zone.
Adequate, efficient and cost-effective infrastructure and utility systems are the principal elements that will ensure operational success of the LS-MFEZ.
This is contained in the LS-MFEZ progressive report availed to the Times in Lusaka yesterday.
The report indicates that since the Government and Industrial Development Corporation (IDC) as shareholders had other competing demands on its limited resources, it may not be feasible to inject the much-needed fresh capital in the LS-MFEZ.
“LS-MFEZ is a public sector-led MFEZ in which the Government is expected to provide the requisite infrastructure and utility systems such as roads, electricity, water, solid waste and sewerage treatment facilities,” states the report.
The report says alternative financing options for infrastructure development in the LS-MFEZ may include listing the company on the Lusaka Stock Exchange (LuSE), which would be a feasible option for raising finance.
This would, however, entail listing the LS-MFEZ on the stock exchange and eventually offering the shares to the public.
It says the company’s shares could be pledged as security for borrowing money from financial institutions once the LS-MFEZ listed on LuSE.
The report says another option would be requesting the Government to source funding to implement infrastructure development in the LS-MFEZ.
“However, this option has many challenges as Government may not have the requisite financial resources to meet such an obligation due to competing demands on its treasury,” reads the report in part.
Other two options would be raising funds through concessional borrowing and floating a sovereign bond.
Under concessional borrowing, this option is feasible for raising finance as it would entail securing a low-cost concession loan from international development banks or Government-to-Government arrangements.
The report says this approach would lessen the Government’s burden of funding the project, although the only challenge this option has is that the lender would dictate stringent loan terms, which may include, among others, selective procurement of consultants, developers and contractors from their respective countries.
Subsequent to this, LS-MFEZ has to ensure that the development is in line with the original master plan of the Zone.
On floating a sovereign bond, the Government may raise a structured debt through local or international capital markets secured by the cash flows of a portfolio of projects within the zone, without recourse to the sponsors.
The revenue generated from the annual lease fees and other investments may be used to pay off the debt.