The Nuts And Bolts Of Public-Private Partnerships
Zen Dlamini, Executive Director: Infrastructure (Soviet and Public Sector), Standard Banking Corporate and Investment Banking
Reliable infrastructure is not only convenient; it is a prerequisite for a thriving business environment, which in turn can achieve sustainable economic development. Without it, foreign investors might look elsewhere, and the ripple effect could be far-reaching, affecting trade, and even expelling local entrepreneurs. For example, Innovisa, a company that handles visas for technology entrepreneurs, reported in 2022 that about 40 Nigerian startup owners move to the UK each year. reason? Strong ICT infrastructure and more diverse investors.
Standard Bank’s Infrastructure Focus
The team’s infrastructure is divided into different categories such as transportation, construction, utilities, OEMs, logistics and social infrastructure – the latter is an asset that adapts to social services and focuses on issues such as health and education.
Despite being active in all of these areas, our focus is particularly three: transportation, logistics and utilities, especially for obvious reasons, as the continent, including South Africa, is a scarcity of water.
One solution that has gained attention in these areas is a strong public-private partnership (PPP). They offer tremendous opportunities. For example, Kumba iron ore is affected by South Africa’s logistics restrictions. Therefore, they worked with TransNet, the Ore User Forum and the Government through the National Logistics Crisis Commission to improve logistics performance and accelerate key projects.
The group plays a crucial role in similar partnerships and we work closely with government entities such as the Southern African Development Bank. CIB plays an important role in projects such as the Lesotho Highland Water Project that provides water to South Africa and the Mokolo Crocodile Water Addition Project.
A more well-known project that the bank continues to play is Gotlin. We have been involved since construction began in 2006 and remain one of its largest commercial lenders. Gaodan reforms public transportation in Gauteng Province, has been transported 7.9 million passengers In fiscal year 2023/4.
Meridian is our long-term partner. The company has been establishing investment certificates on the mainland since 2015, especially in alternative energy infrastructure. We first joined forces with them in 2020, and our most recent partnership was in 2023 when they acquired BTE Renewables’ Kenyan assets, a company that operates onshore wind and solar projects.
In South Africa, Ramaphosa signed the “Power Regulations Amendment” last year. It stipulates far-reaching reforms in the power sector, including the establishment of a competitive power market. The bill would involve other private sectors in local energy markets.
We also see major reforms from the South African Ministry of Finance. For example, any R2 billion quantum project no longer requires the signature of the National Finance Ministry. This is a welcome change because it means we can execute certain projects without the need for unnecessary traditional tape.
Partnerships and policy decisions like this are crucial to ignite the growth of the continent, and we see this in our work. Our partnerships with organizations such as Meridiam show how the public and private sectors work together to unlock infrastructure investments.
These projects are examples of our comprehensive approaches that are achieved through recognition that governments simply cannot meet infrastructure needs across the continent. As a financial service provider, our greatest contribution is to provide relevant expertise in funding.
Therefore, strict due diligence is an important pillar in the banking process. We examine qualitative and quantitative factors, supportable bonds, commercial feasibility, and the impact of each specific project on the United Nations Sustainable Development Goals.
In all of our partnerships, we work with the right players, provide advice based on our expertise and see ourselves as part of the economy. Ultimately, our goal is to perform at speed and quality as it will benefit our communities and our economy. Africa is more than just building roads and bridges; it paves the way for a more prosperous and connected future.
