Government bonds to fund higher education development

Zimbabwe’s government has resolved to issue higher and tertiary education bonds for the development of infrastructure at public universities, polytechnics and colleges.

Presenting the country’s 2016 national budget in parliament recently, Finance and Economic Development Minister Patrick Chinamasa said the bonds would cover all public tertiary and higher education institutions.

The bonds would pave the way for the construction of physical infrastructure that includes staff and student accommodation, lecture theatres, laboratories, workshops, sporting facilities, administration blocks and student service centres. The minister said that more than 117,000 students require accommodation.

Chinamasa argued that bonds were necessary given current budgetary constraints that have seen investments in tertiary and higher education remain largely underfunded, translating into huge accommodation and facilities deficits at institutions.

“Challenges due to lack of fiscal resources have continued to inhibit optimal provision of infrastructure facilities in our institutions of higher and tertiary education. Government will, therefore, in 2016 vigorously pursue arrangements for the financing of infrastructure through issuance of an infrastructure bond, to be underwritten by rentals paid by students and staff.”

Assuming monthly rental payments of US$100 per student for current accommodation, total monthly cash flows amount to US$17.3 million, said Chinamasa: “As part of the security of the bond, a sinking fund will be created, ceded and escrowed to ring-fence receivables.”

He explained that to enhance market acceptance of the higher education infrastructure bonds, there would be a government guarantee, prescribed asset status, and liquid asset status.

Teacher development

Chinamasa also reported that a Teacher Capacity Development programme, launched in July 2014, had been upgrading school teacher qualifications. Around 1,570 teachers were currently enrolled at universities in the country under the initiative.

The programme is focusing on a wide range of disciplines including sciences, mathematics, curriculum research and development, education planning, building and design, and languages and humanities, and is also addressing technical and vocational training needs.