SOUTH Africa is rolling out a new credit-guarantee programme designed to mobilise billions of dollars in private investment for infrastructure, spanning power grid expansion, water systems, ports and freight rail, said Bloomberg News on Tuesday.
The vehicle — the first of its kind in the country — is intended to reduce pressure on the fiscus by attracting private capital without requiring additional sovereign guarantees, the newswire said. The state’s existing contingent liabilities, largely linked to troubled state-owned enterprises, stand at roughly R661bn ($40bn).
The Development Bank of Southern Africa will administer the programme. Its group executive for coverage and origination, Mpho Mokwele, told Bloomberg News the vehicle was expected to leverage up to four times its initial $500m in capital, with that multiplier likely to grow as the fund secures credit ratings and establishes a market track record.
The World Bank’s International Bank for Reconstruction and Development has already committed $350m. The African Development Bank, International Finance Corporation, Germany’s KfW and South Africa’s Industrial Development Corporation have indicated interest in participating, Mokwele said. A local commercial bank has also signalled intent, though no agreement has been finalised.
The National Treasury plans to take up to 20% equity in the vehicle, with South African state entities potentially lifting that share to 30%.
President Cyril Ramaphosa’s government has budgeted R1.07tr for infrastructure over the next three fiscal years. Grid expansion alone is projected to cost R440bn, with port and rail upgrades requiring a further R330bn. Mokwele said the independent transmission programme would be the first initiative the vehicle seeks to unlock.
