Introduction

Zimbabwe faces a dual crisis of severe energy shortages and a chronic housing deficit, both of which present significant opportunities for debt fund and private equity investment (“Private Credit”). Renewable energy and real estate are gaining prominence as core and core plus investments respectively. Private Credit can offer flexible and innovative funding to realise high returns.  

The energy crisis is stark, with frequent power outages at times lasting up to 18 hours a day due to an aging infrastructure. According to the World Bank, only 40% of Zimbabweans have access to electricity, with rural electrification rates as low as 19%. Some listed companies have reported a 20-40% increase in generator fuel usage in 2024 alone, owing to extended loadshedding.

Meanwhile, the housing shortage has reached critical levels, with an estimated deficit of 1.3 million units, particularly in urban areas where rapid urbanization has far outpaced new real estate developments. Consequently, the real estate market remains buoyant with market forecasts indicating sustained favourable returns. Private Credit can play a pivotal role in addressing these challenges by injecting much-needed capital, technical expertise, and innovative financing models into both renewable energy and real estate.

Unlocking Renewable Energy Through Private Credit

Zimbabwe possesses abundant renewable energy potential, particularly in solar, wind, and mini-hydro, but significant investment is required to harness these resources. Solar energy is the most viable short-term solution, with the country receiving over 3,000 hours of sunlight annually, yet solar contributes only about 100 megawatts of the national installed capacity of 2.3 gigawatts. Private Credit firms can fund utility scale solar plants, distributed renewable energy, mini-grids, and industrial rooftop solar installations. Additionally, investments in battery storage systems could help stabilize the grid and reduce reliance on expensive diesel generators, which currently supplement power during outages.

Regulatory Framework for Renewable Energy

Zimbabwe’s renewable energy sector is governed by several key laws and policies, designed to promote private investment, some of which include:

• The Electricity Act [Chapter 13:19] – Regulates electricity generation, transmission, distribution, and licensing.
• The Renewable Energy Policy (2019) – Aims to increase renewable energy contribution to 26.5% of the energy mix by 2030 and provides incentives such as tax breaks for renewable projects. The policy further aims to promote mini-grids to cut on efficiency losses experienced on the national grid.
• Net Metering Regulations (2018) – Allows consumers with solar installations to feed excess power back into the grid.
• The Energy Regulatory Authority Act – Establishes the Zimbabwe Energy Regulatory Authority (ZERA) as the primary regulator for energy projects, ensuring compliance and tariff approvals. Independent Power Producers (IPPs) must obtain licenses from ZERA.
• Zimbabwe Investment and Development Agency Act [Chapter 14:37] – Provides public private partnership regulations and investment protection mechanisms including guarantees against expropriation and repatriation rights for distribution and on exit. Under Zimbabwe’s general investment promotion framework renewable energy projects may qualify for certain tax incentives.

Private Credit in Real Estate

The housing deficit, estimated at 1.3 million units, is exacerbated by rapid urbanization, limited mortgage financing, and high construction costs. Private Credit can play a transformative role by funding large-scale low-income housing projects, particularly in peri-urban areas. Greater returns and efficiencies can be realised through bundling such housing projects with distributed renewable energy projects.

Regulatory Framework for Housing and Construction

Key laws governing housing and construction in Zimbabwe include:

• The Housing Standards Control Act (Chapter 29:08) – Sets minimum construction standards and ensures compliance with safety and quality regulations.
• The Regional, Town and Country Planning Act (Chapter 29:12) – Governs land-use planning and urban development, requiring developers to obtain approval from local authorities.
• The Environmental Management Act (Chapter 20:27) – Mandates environmental impact assessments (EIAs) for large-scale housing projects to ensure sustainability.
• The Contractors Act (Chapter 27:13) – Regulates construction firms, requiring registration with the Construction Industry Federation of Zimbabwe (CIFOZ).

Challenges such as lengthy land acquisition processes, unclear property rights, and high development levies can deter investment. However, Private Credit can mitigate these risks by partnering with experienced developers, incorporating blended finance and leveraging government incentives under the National Housing Delivery Programme, which aims to facilitate public-private partnerships (PPPs) in affordable housing.

Conclusion

Private Credit holds immense potential to transform Zimbabwe’s energy and housing sectors by financing renewable energy projects, particularly distributed renewable energy and low-income housing developments. By leveraging on prevailing market gaps and policies such as the Renewable Energy Policy and National Housing Delivery Programme, investors can capitalize on high-growth opportunities. However, success depends on astute investment decision making, localised risk mitigation strategies, and collaborative partnerships with both public and private stakeholders. With the right approach, Private Credit can not only address Zimbabwe’s energy and housing crises but also drive long-term, inclusive growth. The time for strategic investment is now—Zimbabwe’s sustainable future depends on it.