News / Local
Funding deal struck for Beitbridge border revamp
14 Feb 2021 at 04:41hrs | Views
A US$300 million deal has been struck for the redevelopment of the Beitbridge Border Post, with a consortium of South African banks availing funds for a project that is expected to not only provide a boost to the Zimbabwean fiscus but also lead to increased regional trade.
Reports say the Rand Merchant Bank (RMB), ABSA, Nedbank and Standard Bank are the four South African Banks involved in the project which is expected to usher in a period of infrastructural development in the town of Beitbridge, including the construction of a water treatment plant, housing and a fire station.
According to South Africa's Business LIVE, the financing package includes a US$130m commercial debt tranche with political risk and commercial risk cover provided by the Export Credit Insurance Corporation of South Africa, and a US$65m development finance institution tranche funded by Afreximbank, and the Emerging Africa Infrastructure Fund.
Once upgraded, long-term operations at southern Africa's busiest road border post will be overseen by La Frontiere Group, the project sponsor, alongside Zimbabwean authorities. La Frontiere Group specialises in the building, development and upgrading of government border posts. Finance and Economic Development Minister Professor Mthuli Ncube announced the deal on his Twitter account yesterday.
"A syndicate of banks comprising Rand Merchant Bank, Absa, Nedbank and Standard Bank availed part of the USD300 million for the redevelopment of Beitbridge Border Post. This shows confidence in the Zimbabwe economy, and future growth in regional trade activity," he wrote.
In an article they penned jointly for Business LIVE, Mr Siyanda Mflathelwa, the Infrastructure Sector Solutions, Head: Public-Private Partnerships (PPPs) and Concessions at RMB and Mr Daniel Zinman Infrastructure Sector Solutions Head: Power at the same institution, said despite an economic terrain made difficult by Covid-19, the deal had been sealed and would lead to great benefit for companies that used the border post as well as communities around it.
"In many ways, this transaction blazed a trail for future deals in the sector. We were tasked with finding interested equity investors and lenders within a challenging jurisdiction and at a time of uncertainty in the global economic landscape.
"The structuring was complex, and we faced intricate challenges that had to be responded to with agility and innovation. Typically, lenders in the African project finance sector have muted appetite for market risk, a challenge that was worsened by a pandemic and the consequent economic crisis. In spite of these factors, considered risk analysis and bespoke structuring helped to facilitate this project achieving financial close. The economic impact of the transaction is significant, both to those companies that use the border to trade, and the communities surrounding the border," they wrote.
The deal, they noted, showed the strides that Zimbabwe had made in its bid to attract fresh investment. The infrastructural redevelopments would also ease the congestion problems that had been plaguing the border post.
"This border has been characterised by long waiting periods for trucks, sometimes days, before they got through the border, often travelling hundreds of kilometres to a different border to avoid the long queues. As a result, the border post lost traffic over time.
"This redevelopment of the border post will make it more efficient, leading to increased regional trade, benefiting the Zimbabwe economy and fiscus, and South Africa's economy indirectly. Through the concession, the development has a focused socio-economic impact: In addition to upgrading the ageing infrastructure at the border post itself, the concession also requires the delivery of social infrastructure to the adjacent town of Beitbridge, including a water treatment plant, housing and a fire station.
"This is the first concession of its kind concluded in Zimbabwe in over a decade, illustrating the strides the country has made in attracting foreign direct investment. This is a positive message for African countries and investors — the continent is open for business," they noted.
Reports say the Rand Merchant Bank (RMB), ABSA, Nedbank and Standard Bank are the four South African Banks involved in the project which is expected to usher in a period of infrastructural development in the town of Beitbridge, including the construction of a water treatment plant, housing and a fire station.
According to South Africa's Business LIVE, the financing package includes a US$130m commercial debt tranche with political risk and commercial risk cover provided by the Export Credit Insurance Corporation of South Africa, and a US$65m development finance institution tranche funded by Afreximbank, and the Emerging Africa Infrastructure Fund.
Once upgraded, long-term operations at southern Africa's busiest road border post will be overseen by La Frontiere Group, the project sponsor, alongside Zimbabwean authorities. La Frontiere Group specialises in the building, development and upgrading of government border posts. Finance and Economic Development Minister Professor Mthuli Ncube announced the deal on his Twitter account yesterday.
"A syndicate of banks comprising Rand Merchant Bank, Absa, Nedbank and Standard Bank availed part of the USD300 million for the redevelopment of Beitbridge Border Post. This shows confidence in the Zimbabwe economy, and future growth in regional trade activity," he wrote.
In an article they penned jointly for Business LIVE, Mr Siyanda Mflathelwa, the Infrastructure Sector Solutions, Head: Public-Private Partnerships (PPPs) and Concessions at RMB and Mr Daniel Zinman Infrastructure Sector Solutions Head: Power at the same institution, said despite an economic terrain made difficult by Covid-19, the deal had been sealed and would lead to great benefit for companies that used the border post as well as communities around it.
"In many ways, this transaction blazed a trail for future deals in the sector. We were tasked with finding interested equity investors and lenders within a challenging jurisdiction and at a time of uncertainty in the global economic landscape.
"The structuring was complex, and we faced intricate challenges that had to be responded to with agility and innovation. Typically, lenders in the African project finance sector have muted appetite for market risk, a challenge that was worsened by a pandemic and the consequent economic crisis. In spite of these factors, considered risk analysis and bespoke structuring helped to facilitate this project achieving financial close. The economic impact of the transaction is significant, both to those companies that use the border to trade, and the communities surrounding the border," they wrote.
The deal, they noted, showed the strides that Zimbabwe had made in its bid to attract fresh investment. The infrastructural redevelopments would also ease the congestion problems that had been plaguing the border post.
"This border has been characterised by long waiting periods for trucks, sometimes days, before they got through the border, often travelling hundreds of kilometres to a different border to avoid the long queues. As a result, the border post lost traffic over time.
"This redevelopment of the border post will make it more efficient, leading to increased regional trade, benefiting the Zimbabwe economy and fiscus, and South Africa's economy indirectly. Through the concession, the development has a focused socio-economic impact: In addition to upgrading the ageing infrastructure at the border post itself, the concession also requires the delivery of social infrastructure to the adjacent town of Beitbridge, including a water treatment plant, housing and a fire station.
"This is the first concession of its kind concluded in Zimbabwe in over a decade, illustrating the strides the country has made in attracting foreign direct investment. This is a positive message for African countries and investors — the continent is open for business," they noted.
Source - sundaynews
