Nedbank has taken a landmark step in supporting Africa’s sustainable infrastructure development by merging its project finance and export credit teams into a newly repurposed Africa Infrastructure Finance business unit the bank aims to offer streamlined financial solutions tailored to meet Africa’s unique infrastructure requirements.
Zakhele Mayisa, Co-Head of Africa Infrastructure Finance, remarked, “The newly consolidated unit is client and sector-focused, providing them with a single point of access for infrastructure and risk mitigation solutions. We’re combining the prowess of both teams to deliver both on-balance sheet and off-balance sheet project financing across the continent with applicable risk mitigation instruments across the sectors.”
Infrastructure is often regarded as the heartbeat of any thriving economy and lays the foundation for robust economic growth and development. Sekete Mokgehle, the unit’s Co-Head, emphasized, “Infrastructure is pivotal in bridging trade supply chains, thus facilitating seamless goods and services movement across borders.”
Employment of Strategic Risk Mitigation Tactics
Banks like Nedbank employ strategic risk mitigation tactics in the challenging landscape of African infrastructure financing, marked by economic and political uncertainties. Export credit agencies (ECAs) serve as a primary tool, offering government-backed guarantees that safeguard lenders.
Nedbank’s approach also incorporates political risk insurance, leveraging multilateral agencies such as MIGA (Multilateral Investment Guarantee Agency) or private insurers.
History of Diversification Funding Modalities
Throughout its journey, Nedbank has a rich history of financing diverse infrastructure projects across Africa. “Diversification funding modalities to strongly acceleration of Public Private Partnerships (PPP) and concession backed infrastructure financing arrangements that don’t lean entirely on sovereign balance sheets. Instead, tap into ECAs, insurers, and alike to secure sustainable infrastructure financing,” says the bank.
Africa’s Transportation and Logistics Handling Infrastructure Holds Untapped Potential
Shining a spotlight on accelerated economic development, Mokgehle declared it a top priority. “Africa’s transportation and logistics handling infrastructure holds untapped potential. Be it enhancing regional integration or meeting the needs of urbanization and facilitating trade – we need efficient transport and logistics infrastructure.”
With transport and logistics infrastructure poised to drive economic resurgence in South Africa and across the continent, Nedbank is deepening its commitment to the sector. As Mokgehle puts it, the bank foresees tremendous growth in inter-border railways, roads, and border processing infrastructure. Yet, urban transit systems in cities may soon become the most sought-after transport infrastructure, and Nedbank is poised to finance these ventures.
There is an urgency to address Africa’s estimated annual infrastructure financing deficit of $100-170 billion and there is a need for innovative solutions. Nedbank and its team is set to narrow this gap by leveraging robust risk management and diverse financing options.