South Africa - Project FinancingSouth-Africa-Project-Financing
The South African government and the larger state-owned enterprises (Transnet, Eskom, ACSA, TCTA - Trans-Caledon Tunnel Authority) finance the majority of capital infrastructure investment , although the private sector funds a sizeable portion in the form of public private partnerships (PPP). South Africa was an early pioneer of PPPs, embracing, for example, the use of toll roads to upgrade and maintain the national road systems as early as 1997, and building the first two private prisons in South Africa in 2000-01. Since then, there has been a downturn in PPP projects, outside of the highly successful renewable energy program, but renewed fiscal pressures may see closer cooperation with private funders and operators.
National or provincial governments will generally publish tenders, requiring consortia to respond to PPP-type projects. This is different from normal infrastructure tenders in that all the funding is privately raised. The concessionaire is usually required to build and operate the infrastructure for an extended period, assuming the risks and reaping the rewards with such an endeavor. Project finance in South Africa generally exhibits the following characteristics:
The Government’s PPP unit, a part of the Government Technical Advisory Centre attached to the National Treasury, oversees new and existing projects. Their website, http://www.gtac.gov.za, gives further details around PPPs.
A current list of PPP projects appears here: https://www.gtac.gov.za/Pages/Project.aspx
The five big emerging economies of Brazil, Russia, China, India and South Africa (BRICS) have created a New Development Bank. The bank, headquartered in Shanghai, will fund infrastructure and development projects throughout the developing nations.
Export-Import Bank
Ex-Im Bank is an independent U.S. Government agency that helps finance the overseas sales of U.S. goods and services. In over 70 years, Ex-Im Bank has supported more than R3.86 trillion in U.S. exports. Ex-Im Bank's mission is to create U.S. jobs through exports. The Bank provides guarantees of working capital loans for U.S. exporters, guarantees the repayment of loans, or makes loans to foreign purchasers of U.S. goods and services. Ex-Im Bank also provides credit insurance that protects U.S. exporters against the risks of non-payment by foreign buyers for political or commercial reasons. Ex-Im Bank does not compete with commercial lenders but assumes the risks they cannot accept. It must always conclude that there is reasonable assurance of repayment on every transaction financed. To qualify for Ex-Im Bank support, the product or service must have significant U.S. content and must not affect the U.S. economy adversely. Ex-Im Bank supports the sale of U.S. exports worldwide and will support the financing of the export of any type of goods or services, including commodities, if they are not military-related.
Ex-Im Bank has a solid record of accomplishment built over several decades as the export guarantee partner of choice for costly U.S.-sourced capital procurements in South Africa. It has several Master Guarantor Agreement (MGA) arrangements with South Africa financial institutions and has also developed a dedicated Rand-denominated guarantee loan scheme for South African end-users or end-users in the region that make use of a South African MGA financial partner.
The South African aviation industry as well as power utility Eskom are regular users of Ex-Im Bank guarantees; at the same time importers of small consignments have also found Ex-Im Bank to be useful under certain circumstances.
For more information, please visit http://www.exim.gov.
Overseas Private Investment Corporation (OPIC)
OPIC (http://www.opic.gov/) is the U.S. Government’s development finance institution. It mobilizes private capital to help solve critical development challenges and in doing so, advances U.S. foreign policy. Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets, catalyzing revenues, jobs, and growth opportunities both in the United States and abroad. OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.
Additional contact information appears here:
https://www.opic.gov/doing-business-us/contact-us
U.S. Trade and Development Agency (TDA)
The U.S. Trade and Development Agency promotes economic development in developing countries by funding feasibility studies, consultants, training programs, and other project planning services. TDA is a source of funding for pre-financial close project preparation. In Africa, TDA assists U.S. firms by identifying major development projects that offer large export potential and by funding U.S. private sector involvement in project planning. This, in turn, helps position U.S. firms for follow-on activities during the implementation phase of the project. For more information contact:
Jacob Flewelling
U.S. Trade and Development Agency
Africa Business Development Manager
Tel: + 27 11 290-3084
Email: jflewelling@ustda.gov
Website: http://www.ustda.gov/
Prepared by the International Trade Administration. With its network of more than 100 offices across the United States and in more than 75 markets, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
National or provincial governments will generally publish tenders, requiring consortia to respond to PPP-type projects. This is different from normal infrastructure tenders in that all the funding is privately raised. The concessionaire is usually required to build and operate the infrastructure for an extended period, assuming the risks and reaping the rewards with such an endeavor. Project finance in South Africa generally exhibits the following characteristics:
- Long-term tenders, to match the underlying concession contract with government
- Limited recourse, meaning that the lender takes on the project risk
- Involvement of more than one bank, owing to the large amounts of debt
- Very high gearing as infrastructure is a low-risk asset class, and there is usually no, or very limited market risk assumed by the funders. This results in lower shareholder equity requirements.
The Government’s PPP unit, a part of the Government Technical Advisory Centre attached to the National Treasury, oversees new and existing projects. Their website, http://www.gtac.gov.za, gives further details around PPPs.
A current list of PPP projects appears here: https://www.gtac.gov.za/Pages/Project.aspx
The five big emerging economies of Brazil, Russia, China, India and South Africa (BRICS) have created a New Development Bank. The bank, headquartered in Shanghai, will fund infrastructure and development projects throughout the developing nations.
Export-Import Bank
Ex-Im Bank is an independent U.S. Government agency that helps finance the overseas sales of U.S. goods and services. In over 70 years, Ex-Im Bank has supported more than R3.86 trillion in U.S. exports. Ex-Im Bank's mission is to create U.S. jobs through exports. The Bank provides guarantees of working capital loans for U.S. exporters, guarantees the repayment of loans, or makes loans to foreign purchasers of U.S. goods and services. Ex-Im Bank also provides credit insurance that protects U.S. exporters against the risks of non-payment by foreign buyers for political or commercial reasons. Ex-Im Bank does not compete with commercial lenders but assumes the risks they cannot accept. It must always conclude that there is reasonable assurance of repayment on every transaction financed. To qualify for Ex-Im Bank support, the product or service must have significant U.S. content and must not affect the U.S. economy adversely. Ex-Im Bank supports the sale of U.S. exports worldwide and will support the financing of the export of any type of goods or services, including commodities, if they are not military-related.
Ex-Im Bank has a solid record of accomplishment built over several decades as the export guarantee partner of choice for costly U.S.-sourced capital procurements in South Africa. It has several Master Guarantor Agreement (MGA) arrangements with South Africa financial institutions and has also developed a dedicated Rand-denominated guarantee loan scheme for South African end-users or end-users in the region that make use of a South African MGA financial partner.
The South African aviation industry as well as power utility Eskom are regular users of Ex-Im Bank guarantees; at the same time importers of small consignments have also found Ex-Im Bank to be useful under certain circumstances.
For more information, please visit http://www.exim.gov.
Overseas Private Investment Corporation (OPIC)
OPIC (http://www.opic.gov/) is the U.S. Government’s development finance institution. It mobilizes private capital to help solve critical development challenges and in doing so, advances U.S. foreign policy. Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets, catalyzing revenues, jobs, and growth opportunities both in the United States and abroad. OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.
Additional contact information appears here:
https://www.opic.gov/doing-business-us/contact-us
U.S. Trade and Development Agency (TDA)
The U.S. Trade and Development Agency promotes economic development in developing countries by funding feasibility studies, consultants, training programs, and other project planning services. TDA is a source of funding for pre-financial close project preparation. In Africa, TDA assists U.S. firms by identifying major development projects that offer large export potential and by funding U.S. private sector involvement in project planning. This, in turn, helps position U.S. firms for follow-on activities during the implementation phase of the project. For more information contact:
Jacob Flewelling
U.S. Trade and Development Agency
Africa Business Development Manager
Tel: + 27 11 290-3084
Email: jflewelling@ustda.gov
Website: http://www.ustda.gov/
Prepared by the International Trade Administration. With its network of more than 100 offices across the United States and in more than 75 markets, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.