Perceived sovereign risk in the country by potential investors has had the effect of increasing the cost of doing business in Zimbabwe. This has resulted in investors looking to other markets to deploy their capital. While other countries in the region like Mozambique have seen an upsurge in foreign direct investment, Zimbabwe has witnessed a relative decline in foreign direct investment due to perceived sovereign risk. Therefore, the main motivation of the study was to investigate the main risks in infrastructure in Zimbabwe and ways of mitigating these risks to leverage private capital into infrastructure finance in the country. The study adopted a qualitative approach where data were collected using semi-structured interviews from various stakeholders (infrastructure finance experts, government officials, private sector players, and contractors, as well as financing institutions). The study noted that the major risks in infrastructure financing in Zimbabwe are: currency, policy/regulatory, political, and demand, as well as credit and finance. Exchange rate risk was cited as one of the major infrastructure financing risks in Zimbabwe. The exchange rate poses challenges from two fronts, namely, availability and volatility. The scarcity of foreign currency in the country and the existing stringent exchange control regulations make it difficult for investors to import critical equipment and repatriate dividends and profits to their home countries. These challenges have the effect of discouraging investors from investing in the infrastructure sector. The study noted that risks increase the cost of implementing projects, hence risk management is key to ensuring projects are successfully implemented. In terms of the risk mitigation measures, government interventions through policy consistency and provision of guarantees, can do more in terms of insulating investors from risks in infrastructure finance in Zimbabwe. The author recommends government interventions, such as providing guarantees, ensuring policy consistency, and allowing central bank independence, to create a more stable investment environment.
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