Zimbabwe launches a $9 billion power plan

From the newsletter

The southern African country has unveiled a plan to raise at least $9 billion to more than double its current generation capacity with renewables. The initiative, part of the World Bank's Mission 300, seeks substantial private investment to tackle the country’s severe “load shedding” that has hit it hard in the past few years, often lasting up to 18 hours a day.

• Zimbabwe is seeking the majority of its new funding from private investors since it previously defaulted on loans from multilateral lenders, including the World Bank.

• The country badly needs more electricity — 38% of the population is unconnected. The World Bank estimates that power shortages cost it 6% of GDP.

More details

• Zimbabwe presented the plan in a closed-door conference in London this week. Under the plan, it details that $3.81 billion will go to power generation, with 90% of that coming from private investment. Transmission follows with $968 million, 80% funded by the state, and $147 million for distribution, also 80% funded by the state. The private sector will contribute 70% of funding for solar systems and clean cooking technologies.

• Ghana, Togo, Mozambique, and Burundi are also scheduled to present their plans at the conference. Eleven countries, including the Democratic Republic of Congo and Nigeria, disclosed their blueprints to boost electrification at the Tanzania conference earlier this year.

• Zimbabwe faces a critical energy crisis, largely due to its heavy reliance on drought-affected hydropower and ageing infrastructure. The grid has a deficit of about 600- 750 MW, which often means the country has to load shed some demand. The situation is projected to worsen as demand is set to more than double from the current 2,200 MW by 2030. This demand will arise from the mining sector, which alone requires about 2,000 MW to operate optimally. On top of this, the country's unstable local currency makes investors wary of investing.

• In response, Zimbabwe is pursuing a two-pronged strategy: stabilising existing power plants and rapidly expanding new generation, especially renewables. The government is refurbishing thermal plants and has a pipeline of new projects, including large-scale solar farms. Independent Power Producers (IPPs) are set to play a significant role, with over 16,000 MW of potential projects.

• To expand on power generation, the country's energy policy framework is increasingly geared towards encouraging private sector involvement. The National Renewable Energy Policy (2020) offers incentives such as reduced licensing fees and tax benefits to attract investment in renewable energy projects, targeting 2,100 MW of renewable capacity by 2030, more than double the current. The recently adopted National Energy Efficiency Policy (2024/2025) also supports private-sector-led initiatives like captive power plants.

• In our Renewables Rising funding database, the country has raised at least $150 million since February. While direct borrowing is limited, development banks are indirectly facilitating investment through programmes that encourage private sector participation. The European Union and the British government are contributing to Zimbabwe's solar and energy transition projects. Chinese companies, in particular, are emerging as significant financiers for numerous energy initiatives across the country.

• A competitive IPP procurement framework is anticipated by the second quarter of 2026. The policy also champions captive power plants, providing reliable energy for industries and mandating heavy industries to develop their own power supply by 2026.

Our take

• Zimbabwe will likely struggle to attract private sector investments given its historical record of non-repayment and its current volatility issues. At a government level, things will move slowly.

• The country’s default on loans means it cannot access traditional, often cheaper, financing from institutions like the World Bank or AfDB. This leaves them at the mercy of private capital, which naturally charges higher interest rates based on risks. Projects will get expensive.

• However, industrial customers, particularly those in mining who export their products and earn foreign currency, represent a big opportunity for investors. Their high energy consumption is a guarantee of demand. Investors can structure PPAs on foreign currency, de-risking their investments from local currency fluctuations.