Zimbabwe's cash-strapped government has impounded the Universal Services Fund (USF), established to develop telecommunications infrastructure in remote areas – and will use this resource to fund the digitalisation program for the state broadcaster.

Finance Minister Patrick Chinamasa said on Thursday that "implementation of the Digitalisation Migration Project, which began in February 2015, has been facing funding challenges" and that progress had stalled.

Only about US$30 million of the US$172.9 million required has so far been disbursed as Zimbabwe continues to face a cash crunch that will now see the economy grow by 1.2% this year, according to government projections.

Authorities have now allocated resources from the USF to fund the broadcasting digitalisation migration.

"The government will facilitate implementation of the project with funding drawn from the Universal Services Fund, to be reimbursed once the resources have been mobilised from the market," Chinamasa said in his 2016 midterm budget statement.

Initially, the project was supposed to have been "funded from the Broadcasting Fund, leveraging on the digital dividend spectrum space, created through migration from the analogue to the digital system".

Information from the treasury department shows that the Broadcasting Authority of Zimbabwe "sold the spectrum for US$200 million to Net-One (state owned telecom company) who, however, could not raise the requisite amount".

As a result of NetOne's failure to raise this amount, and "given the importance of the project" the government has taken a decision to dispose of the spectrum to other players, although there have been no further details on this.

Chinamasa said the Ministry of ICT will handle the fresh disposal of spectrum for digital broadcasting.

Telecommunications companies contribute into the USF through a 1.5% tax levied from their income. Econet Wireless has previously demanded that the Posts and Telecommunications Regulatory Authority of Zimbabwe (Potraz) disclose how it was utilising funds from the USF.

It argued that it had contributed as much as US$59 million into the fund during the period March 2009 to November 2015. Infrastructure constructed using the fund is supposed to be shared by all operators, according to telecom industry officials.