By Zen Dlamini, Executive Head: Infrastructure (Sovereign and Public Sector), Standard Bank Corporate and Investment Banking
Reliable infrastructure isn’t just a convenience; it’s a prerequisite for a thriving business environment which in turn enables sustainable economic development. Without it, foreign investors may look elsewhere and the ripple effect can be far-reaching, impacting trade and even driving away local entrepreneurs. For instance, Innovisa, a company that processes visas for tech entrepreneurs, reported in 2022 that around 40 Nigerian startup owners move to the UK each year. The reason? Robust ICT infrastructure and a more diverse pool of investors.
STANDARD BANK’S INFRASTRUCTURE FOCUS
The Group segments infrastructure into different categories, such as transport, construction, utilities, original equipment manufacturers, logistics and social infrastructure – the latter being those assets that accommodate social services and focus on issues such as health and education.
Although active in all these sectors, our focus is on three areas in particular: transport, logistics and utilities – especially water, for obvious reasons, as the African continent, including South Africa, is water scarce.
One solution that is gaining traction in these areas is strong public-private partnerships (PPPs). They present a huge opportunity. Kumba Iron Ore, for example, has been particularly affected by logistics constraints in South Africa that throttle commodity exports. They therefore work with Transnet, the Ore User’s Forum and government through the National Logistics Crisis Committee to improve logistics performance and expedite critical projects.
The Group plays a crucial role in similar partnerships where we work closely with government entities like the Development Bank of Southern Africa. CIB has been instrumental in projects like the Lesotho Highlands Water Project, which supplies water to South Africa, and the Mokolo Crocodile Water Augmentation Project.
A better-known project where the bank continues to play a role is the Gautrain. We have been involved since 2006 when construction began and still is one of its biggest commercial lenders. The Gautrain revolutionised public transport in Gauteng and has transported 7.9 million passengers in the 2023/4 financial year.
Meridian is another of our long-term partners. The company has been building its investment credentials on the continent since 2015, especially with regards to alternative energy infrastructure. We first joined forces with them in 2020 and our most recent partnership came in 2023 when they acquired the Kenyan assets of BTE Renewables, a company that operates onshore wind and solar projects.
In South Africa, President Ramaphosa signed the Electricity Regulation Amendment Act last year. It sets out far-reaching reforms of the electricity sector, including the establishment of a competitive electricity market. This Act will enable additional private sector involvement in the local energy market.
We’ve also seen significant reforms from South Africa’s National Treasury. For instance, any project below a R2 billion quantum no longer needs National Treasury’s sign-off. This is a welcome change as it means we can execute certain projects without unnecessary red tape.
Partnerships and policy decisions like these are crucial for igniting growth on the continent, and we’re seeing this first-hand in our work. Our partnerships with organisations like Meridiam demonstrate how public and private sectors can work together to unlock infrastructure investment.
These projects are practical examples of our comprehensive approach which grew from the recognition that governments simply cannot meet the infrastructure demands across the continent by themselves. As a financial services provider, our biggest contribution is to provide the relevant expertise regarding funding.
Rigorous due diligence is therefore an important pillar in the Bank’s process. We look at both qualitative and quantitative factors, bankability, commercial viability, and the impact of each specific project in terms of the United Nations Sustainable Development Goals.
In all our partnerships, we work with the right players, provide input based on our areas of expertise, and see ourselves as part and parcel of the economy. Ultimately, our aim is to execute with speed and quality, because it will benefit our communities and economies. Africa isn’t just building roads and bridges; it’s paving the way for a more prosperous and connected future.