<\/p>\n
South Africa plans to rapidly expand a new credit-guarantee vehicle to support billions of dollars in infrastructure projects, from power-grid expansion and water systems to ports and freight rail.<\/p>\n
The programme \u2013 a first for the country \u2013 is designed to mobilise private capital while limiting pressure on the state, which has previously been forced to extend sovereign guarantees to scandal-hit state companies. Those contingent liabilities currently amount to about R661 billion.<\/p>\n
South Africa\u2019s plan to expand its national power grid by 14 000 kilometres will cost about R440 billion.<\/p>\n
\u201cIt\u2019s going to be a big injection in a very short time,\u201d said Mpho Mokwele, group executive for coverage and origination at the Development Bank of Southern Africa, which will oversee the programme. \u201cWe now have the fiscal headspace to issue further guarantees to support our infrastructure projects and programmes.\u201d<\/p>\n
Read: Government\u2019s plans for SA infrastructure development<\/p>\n
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President Cyril Ramaphosa\u2019s government plans to ramp up infrastructure investment in Africa\u2019s biggest economy, budgeting R1.07 trillion over the next three fiscal years. The credit-guarantee vehicle will complement the president\u2019s push. It is expected to mobilise up to four times its initial $500 million in capital, with the multiplier rising as it secures credit ratings and gains market acceptance, according to Mokwele.<\/p>\n
The fund has already secured $350 million from the World Bank\u2019s International Bank for Reconstruction and Development. The African Development Bank, International Finance, Germany\u2019s KfW and South Africa\u2019s Industrial Development have expressed interest in contributing, Mokwele said.<\/p>\n
A local commercial bank has also signalled interest, though Mokwele declined to name it before a final agreement is reached.<\/p>\n
\u201cWhen one of them comes into the mix others do follow,\u201d he said of the commercial banks. \u201cIt\u2019s just about signalling, sending a positive signal to the market that they\u2019re keen on participating and supporting the government\u2019s efforts to unlock infrastructure.\u201d<\/p>\n
The National Treasury is also planning to contribute funds and will take up as much as 20% of equity in the vehicle. South African state companies, including the DBSA, may boost that to 30%.<\/p>\n
South Africa\u2019s planned expansion of the national grid by 14 000 kilometres to tap some of the world\u2019s best renewable energy potential in the western half of the country is expected to cost R440 billion alone, while improving ports and freight-rail lines will cost another R330 billion.<\/p>\n
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\u201cThe first programme that we are looking at unlocking is the independent transmission program,\u201d Mokwele said. \u201cIt\u2019s actually meant for the infrastructure projects and programs holistically,\u201d which would even include hospitals and student accommodation, he said.<\/p>\n
The Trans-Caledon Tunnel Authority, in charge of some of South Africa\u2019s biggest bulk-water provision projects, is also expected to benefit, he said. The DBSA will also run a public-sector participation unit to attract investment into South African logistics, Mokwele added.<\/p>\n
Read: Fixing SA\u2019s water woes means curtailing municipalities\u2019 free-spending ways
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\u00a9 2026 Bloomberg<\/p>\n
#targets #infrastructure #deals #guarantee #fund<\/p>\n","protected":false},"excerpt":{"rendered":"
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