Standard Bank was awarded the lead debt arranger mandate and WBHO won the Engineering, Procurement and Construction contract.
The Export Credit Insurance Corporation of South Africa Ltd has insured the project for political risk insurance. The total value is $90 million and construction is expected to take up to 18 months.
SAIIC is a joint venture company formed by Old Mutual, Sanlam, Nedbank and NLP to originate, develop and operate infrastructure projects in Southern Africa. The shareholders of SAIIC have a rich track record in infrastructure development in Zimbabwe, in particular, having constructed and operated the bridge linking Zimbabwe and South Africa since 1995.
Beitbridge Border Post is extremely important to the economies of sub-Saharan Africa. It is the busiest regional transit link in Eastern and Southern Africa and forms the main axis of the North-South Corridor linking South Africa by road and rail with Zimbabwe, Botswana, Zambia, DRC, Malawi, Tanzania and Northern Mozambique. Over 10 million tons of cargo passes along this corridor every year.
Kingdom Mugadza, an IDEAS Fund portfolio manager at Old Mutual Alternative Investments, said that research conducted by the UK Department for International Development has shown that the cost of transport in Africa is about 30% to 40% above that in other developing regions – representing a substantial drag on regional trade and economic development.
Furthermore, in sub-Saharan Africa, transport costs absorb more than 20% of foreign export earnings, rising up to 50% in some landlocked nations.
Mugadza noted that the poor state of systems and infrastructure at the Beitbridge Border Post means that it takes an average of 34 hours for a northbound truck to cross the border, while the south-bound crossing took 11 hours.
“If the cost of trucks standing at border posts is $100 million per annum – as estimated by the Road Freight Association of South Africa – then an overhaul of the systems and infrastructure at Beitbridge in order to reduce the cost of trade along the North-South Corridor is long overdue,” he said.
Currently Old Mutual has over US$1.5 billion (approximately R10.2 billion) in infrastructure investments across the region, ranging from public-private partnerships to clean energy investments.
Post published in: Business