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CEO’s Report on the Disbursement of Funds
Executive Summary
I am pleased to present the ZINARA Operations Overview and Road Funds Disbursement Report for the year 2023.
As the Zimbabwe National Road Administration, we value transparency and accountability and have placed these virtues at the centre of our operations. In 2022, we resolved to publish all disbursements to road authorities as a way of acquitting ZINARA on the utilisation of the road funds that it handles.
This was in addition to the other many initiatives by the organisation aimed at resolving legacy governance issues that had historically brought ZINARA into disrepute. Some of these key actions include the complete resolution of 59 out of the 63 matters listed in the Grant Thornton forensic audit report and regularisation of the holding of AGMs with Audited Accounts from the Auditor General’s office. This was a key corporate governance activity for which ZINARA had since incurred a 3-year backlog. All these efforts have brought ZINARA into good standing as a corporate entity as well as with key stakeholders.
The quarterly publication of the disbursement schedule has courted healthy interest among the motoring public and has subsequently triggered varied and valuable comments and queries. In this current publication, we have sought to give detail and clarity to the various issues raised by our stakeholders. We desire that this report will go a long way to give our valued clients and stakeholders a clearer view of the road fund administration including allocation to road authorities and other financial commitments. We look forward to constructive and collaborative engagements thereafter.
Table 1
| Income | Annual Perfomance
2023 |
% of | Annual Perfomance
2023 |
% of | Annual Perfomance
2022 |
% of |
| Actual | Rev | Revised Budget | Rev | Prior Year | Rev | |
| Total Revenue | 868,594,957,947 | 100% | 768,338,657,893 | 100% | 83,447,861,387 | 100% |
| Vehicle license fees | 293,009,230,109 | 34% | 238,157,780,063 | 31% | 23,581,087,647 | 30% |
| Fuel Levy | 134,260,390,079 | 15% | 119,874,121,535 | 16% | 13,373,558,282 | 17% |
| Toll fees | 328,764,635,251 | 38% | 309,924,048,455 | 130% | 30,129,916,200 | 39% |
| Transit fees | 91,497,732,545 | 11% | 82,877,106,979 | 69% | 9,063,213,842 | 12% |
| Abnormal Load and Overload fees | 8,841,901,334 | 1% | 4,442,017,267 | 1% | 608,884,273 | 1% |
| Commission & Other Revenues | 12,221,068,629 | 1% | 13,063,583,595 | 16% | 1,091,201,142 | 1% |
| Retention by Agent (Zinara @12%) | (106,264,781,100) | 12% | (93,775,057,245) | 12% | (9,159,465,942) | 12% |
| Available for Disbursements and Capex | 762,330,176,847 | 88% | 674,563,600,648 | 88% | 74,288,395,445 | 89% |
| Collection costs | (135,062,188,775) | 16% | (125,471,563,835) | 16% | (12,849,414,723) | 17% |
| Disbursements to Road Authorities & Other | (563,205,509,954) | 65% | (423,230,043,877) | 55% | (52,878,909,547) | 63% |
| Urban Councils | (38,047,942,427.15) | (38,996,927,938) | (2,944,118,756) | |||
| Rural District Councils | (27,725,785,257.87) | (46,921,575,162) | (4,082,920,567) | |||
| Department Of Roads | (85,495,290,298) | (97,180,694,591) | (15,458,537,015) | |||
| Rural Infrastucture Devevelopment Agency | (67,281,384,060) | (67,281,384,060) | (8,123,542,819) | |||
| Toll Infrastructure | (2,218,718,730) | (17,500,000,000) | (1,025,949,655) | |||
| Plumtree-Forbes Disbursement | (108,295,537,459) | (54,095,819,816) | (6,077,145,313) | |||
| Emergency Disbursement | (1,018,164,689) | (16,921,784,877) | – | |||
| Vehicle Inspection department | (649,824,832) | (13,202,410,726) | – | |||
| ERRP Administration Expenses | (2,978,122,816) | (2,510,731,606) | (606,245,500) | |||
| DBSA Loan repayment | (229,305,180,785) | (68,429,156,500) | (13,979,288,500) | |||
| ZB Bank Loan Repayment | (189,558,601) | (189,558,601) | (581,161,422) | |||
| Capital expenditure | (6,988,656,640) | 1% | (64,887,733,485) | 8% | (1,004,660,796) | 1% |
| Surplus | 57,073,821,478 | 7% | 60,974,259,451 | 8% | 7,555,410,379 | 9% |
As ZINARA, we remain committed to the effective discharge of our mandate as a road fund manager for road infrastructure maintenance. Our core mandate is scoped around the maintenance of gazetted roads and not the construction of new roads and road infrastructure. With the guidance of the Government of Zimbabwe, we support road authorities in delivering various road infrastructure maintenance and rehabilitation projects across the country.
In keeping with our mandate, as well as the national Vision 2030; “Towards an Upper Middle Income Society by 2030,” we are steadfastly dedicated to the expedited drive to upgrade and maintain improved road infrastructure in Zimbabwe.
Revenue Collection Update
ZINARA’s gross road fee collections amounted to ZWL $868 billion in 2023, closing 13% above budget. The revenue mix comprised 38% contribution from all 29 Tolling points nationwide while licensing fees contributed 34% up from 30% in 2022. Licensing revenue grew in the year owing to the various initiatives we undertook to improve access to licensing services. This included setting up licensing systems at Tollgates, Central Vehicle Registry, ZIMRA, and VID.
These activities, complemented by roadside enforcement operations and marketing promotions, saw gradually improved licensing and we anticipate continued growth in the current year. Fuel levies and transit fees on the other hand contributed 15% and 11 % respectively. Overall, traffic volumes through the main revenue streams grew by an average of 7% against the prior year. Zimbabwe has just over 1.2million registered vehicles and of these, only 60% are regular in terms of licensing compliance. On average, between 135,000 and 150,000 vehicles were licensed monthly in 2023.
Table 2 shows the month-on-month comparative presentation of the volumes per revenue stream with licensing indicating the cumulative total of compliant vehicles.
Table 2
| MONTH | TRANSIT | TRAFFIC | MONTHLY | LICENSING VOLUMES | TOLLING | VOLUMES |
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
| January | 20,110 | 18,468 | 172,188 | 225,989 | 2,522,066 | 2,363,836 |
| February | 20,712 | 18,138 | 306,823 | 336,715 | 2,163,223 | 2,238,942 |
| March | 22,379 | 19,457 | 447,835 | 458,398 | 2,478,089 | 2,390,766 |
| April | 22,144 | 18,137 | 555,709 | 562,123 | 2,671,614 | 2,618,783 |
| May | 22,307 | 20,458 | 625,937 | 624,111 | 2,544,433 | 2,547,607 |
| June | 22,020 | 20,062 | 661,982 | 671,259 | 2,430,888 | 2,352,720 |
| July | 22,780 | 21,678 | 682,806 | 694,182 | 2,515,915 | 2,482,843 |
| August | 23,431 | 22,584 | 709,711 | 724,129 | 2,804,975 | 2,772,679 |
| September | 23,899 | 22,122 | 738,153 | 752,130 | 2,715,297 | 2,529,784 |
| October | 25,606 | 22,610 | 760,996 | 765,168 | 2,824,503 | 2,623,303 |
| November | 27,043 | 21,495 | 780,494 | 776,538 | 2,594,504 | 2,350,932 |
| December | 28,277 | 22,366 | 800,707 | 792,291 | 3,417,043 | 3,058,254 |
| TOTAL | 280,708 | 247,575 | 31,682,550 | 30,330,449 | ||
Disbursements Overflow
ZINARA committed 88% of collected revenue to road-related disbursements and direct costs of collection, reserving 12% for the administration. This has been possible through financial discipline and prudence in the management of costs across the board.
Road funds are allocated to road authorities following the disbursement formula prescribed in the Road Act. The road authorities informed of their respective budget allocations and based on these figures, they submit proposals of their projects in their respective jurisdictions. These are subsequently reviewed by ZINARA and due approval processes are undertaken.
At the funds disbursement stage, money is dispatched at two levels. The first is for routine maintenance which is an advance disbursement done quarterly. This is accessed when the authorities would have fulfilled several processes, chief among them being acquitting funds previously issued to them. The second level is for periodic maintenance and this is issued upon submission of Interim Payment Certificates (IPCs) after works have been completed.
In addition to disbursing these funds, ZINARA also provides technical monitoring and evaluation support to road authorities through the ZINARA Provincial Road Engineers to enable them to effectively complete their projects and submit the requisite acquittals timeously ahead of the next disbursement.
The expenditure activities are detailed in the paragraphs that follow.
Road Authorities’ Allocation
The funds disbursed to the four Road Authorities amounted to ZWL $219 billion. Great improvement in the uptake of allocation of funds was noted across the provinces. Over twenty road authorities claimed 100% of their allocated funds, while a considerable handful accessed below 75%. The provinces with the highest uptake were Harare Metropolitan Province and Manicaland, both claiming about 97% of their budgets. The lowest claims were from Bulawayo Metropolitan Province, Masvingo Province, and Matebeleland North Provinces, both accessing less than 65% of their budgets. Urban councils in total claimed 81% of their allocated budgets while Rural councils accessed 71%.
The failure to access full disbursement allocation in some instances is mainly attributed to a handicap in acquitting and submitting Interim Payment Certificates to qualify for the next funds drawdown. Road Authorities that have successfully accessed their full budgets have gone on to undertake good work in their respective jurisdictions and they must be applauded for their effectiveness and efficiency in using road user fees to implement tangible programmes.
Meanwhile, it is important to note that DOR and RIDA disbursements are implemented on designated roads across all provinces, thereby adding to the initial disbursement amount channelled through Road authorities in those areas. For example, road projects amounting to an equivalent of US$ 40 million were implemented through DOR in Harare.
Debt Management
ZINARA is still servicing the DBSA Loan which had previously fallen into arrears in prior years. Under the new Zinara, the loan was restructured and we are now fully regular with our payments. In 2023, ZWL $229 billion was committed towards the DBSA loan repayment. This significant payment reduced the outstanding loan balance to an equivalent of US$65 million. Related to this was the payment of ZWL $108 billion for the maintenance of the Plumtree-Harare-Mutare Highway in tandem with operational clauses of the loan agreement. This investment not only ensures the highway’s upkeep but also points to financial discipline in adherence to contractual obligations.
Capital Expenditure
ZINARA’s capital expenditure for 2023 stood at ZWL 6.9 billion. This was channelled primarily towards the upgrading of systems, digital transformation as well as various assets that are integral to enhancing the operational efficiencies of the administration.
Collection Costs
Collection costs comprise costs related to transaction fees, IMTT Tax, and the cost of outsourced revenue collection services and infrastructure. In 2023, the cost of collection accounted for 16%, marginally improving from 17% in 2022.
Surplus Funds and Fiscal Health
The year-end surplus of ZWL $57 billion was realised representing a healthy financial position for ZINARA. This surplus made for 7% of the expenditures and remained in reserve for road authorities that are yet to access their full budgets. This amount is indicative of sound financial management and provides a buffer for unforeseen expenditures or projects.
Administrative Costs
Administrative costs, including payroll, consumed 12 percent of the revenue, reflecting a cost-conscious administrative strategy. Keeping administrative expenses in check is crucial to ensure that the bulk of the funds can be channelled into road infrastructure projects. This balance between operational costs and project funding is essential for the long-term sustainability of ZINARA’s operations.
Routine and Periodic Maintenance Overview
In the year under review, periodic maintenance projects undertaken accounted for 220 km reconstructed and rehabilitated roads while 71km were resealed. 633km were re-gravelled and spot re-gravelling was done on 17, 633 km. Pothole patching accounted for 6,904. 69 km and gravel patching constituted 2 197 55km. These works represented 70 percent of the 2023 annual disbursement budget. In terms of routine maintenance, bush clearing covered 23,153,992 square meters while drainage clearing accounted for 273,588 meters, and 2,584 culverts were cleaned, all in all accounting for 30 percent of the total disbursement budget for 2023.
Special Public Interest Projects
During the year 2023, the administration funded several key economic projects that have helped to transform people’s lives in different parts of the country. Some of these projects include Somgolo bridge which is 178 metres long and was repaired at a cost of ZWL $15,5 billion. The completion of this project has enabled improved access to critical services and markets. The bridge connects Tsholotsho and Lupane districts. Another key project was the rehabilitation of the 10km stretch on the Binga-Siakobvu road at a cost of ZWL $353 billion. The road connects three provinces namely Matabeleland North, Midlands, and Mashonaland West. Furthermore, the road cuts back the current Harare Binga route by 300kms. In other projects, Rwenya bridge was worked on at the value of ZWL $5 billion. This bridge connects Manicaland and Mashonaland East provinces. In Harare, work was undertaken on high-traffic roads which include Alps Road, Pleasant Valley Road, and Masocha Ndlovu Road among others.
Looking Ahead
In previous years, it has emerged that most road authorities have struggled to complete designated projects on time, within budget and to standard quality due to a lack of equipment and fuel. A significant portion of the funds we have disbursed to road authorities has been used to hire equipment, and this is not a sustainable way to complete road projects. Therefore, plans are at an advanced stage to couch a disbursement model that capacitates road authorities with the requisite equipment and provides them with fuel. This will go a long way to ensure that projects are completed in a timely and efficient manner.
In addition to capacitating the Road Authorities, Zinara will be undertaking extensive work to improve tolling infrastructure. This will include the upgrading of six tolling sites from the current structures to toll plazas. Additionally, we are at an advanced stage in the e-tolling project and we expect to have the pilot running before the end of the year.
Meanwhile, with the introduction of the new toll fee structure, we are looking forward to improved revenue inflows which will aid in ensuring that we are better placed to fund the various projects across the country.
Conclusion
In conclusion, ZINARA’s 2023 disbursement summary reflects a financially robust year with strategic investments that bode well for Zimbabwe’s infrastructure development goals. The administration’s approach to revenue collection, cost management, and debt servicing exemplifies a model of sustainable financial stewardship. The challenge moving forward will be to maintain this level of fiscal discipline while expanding the revenue base and adapting to the dynamic economic environment. Strategic planning, transparency, and accountability will be essential in continuing to build public trust and support for ZINARA’s critical work.
Nkosinathi Ncube, Chief Executive Officer.