Nicola Mawson
The Infrastructure Fund (IF), a collaboration between the government, the Development Bank of Southern Africa (DBSA), National Treasury, and Infrastructure South Africa (ISA), has generated socio-economic benefits worth almost R100 billion in its four years of existence.
This was said by the IF chief investment officer, Mohale Rakgate, yesterday as he said the Fund has demonstrated “substantial advancement and early-stage economic disbursements”.
Established in 2020 following the signing of a Memorandum of Understanding between the parties, the IF was tasked with helping alleviate the burden on the fiscus through bespoke blended financing solutions by sourcing and blending capital from the private sector, institutional investors, development finance institutions, and multilateral development banks.
Its aim is to do so by securing commercial, international and institutional investment for public sector infrastructure projects.
The government set aside R100bn for projects under the IF with the understanding that the private sector would then contribute R1 trillion to get projects to bankable stage in a decade through what is effectively a crowdfunding financial model. This allows projects to be implemented faster than has been traditionally the case.
So far, initiatives such as the Ports of Entry project, which includes the Cape Town Container Terminal Expansion, have generated regional economic benefits valued at R6bn and national benefits valued at R29bn.
The container expansion endeavour falls under Project Ukuvuselela, an initiative by Transnet to restore the operational capacity of rail infrastructure to cater for increasing volumes of the automotive industry.
The economic benefits of the project include reduced logistics costs, reduction in negative environmental externalities, less congestion damage to road infrastructure, and increased foreign direct investment.
Projects like Goodwood Station and Lufhereng, under the human settlements mandate, as well as the Olifants Management Model Programme in water and sanitation, are under construction.
The DBSA provides operational support to the IF, as well as enabling bankability of the projects. Among its services are technical assessment, coordination of due diligences and programme management up to financial close.
Currently, the IF has been entrusted by project sponsors with packaging and financing 26 blended finance projects, representing a combined capital value of R102bn.
“These initiatives span sectors such as water and sanitation, human settlements, student accommodation, transport, health, and municipal energy,” said Rakgate.
Among the 26 projects are:
- Human Settlements: Projects like Goodwood Station, Hospital Street, Midrand Heights, and Lufhereng Mixed-Use Development, totalling R8.7bn.
- Water and Sanitation: Initiatives like uMkhomazi and Olifants Management Model (Phases 2B, 2B+, 2D, and 2F), eThekwini Non-Revenue Water, and Moretele North Klipvoor schemes, totalling R51.2bn.
- Transport: Key projects such as the 6 Ports of Entry Public-Private Partnership, Ukuvuselela, and Cape Town Container Terminal Expansion, totalling R19bn.
- Student Accommodation: A suite of 10 projects across universities and TVET colleges, totalling R6.7bn.
- Health and Municipal Energy Public-Private Partnerships: Including Tygerberg Hospital and City of Johannesburg's Alternative Waste Treatment project, totalling R16.1bn.
“These projects are in partnership with various project sponsors, including the departments of home affairs, human settlements, water and sanitation, and higher education and training, along with municipal authorities and water boards,” said Rakgate.
The 26 blended finance projects have attracted R37bn over a four-year period from the R100bn allocated by National Treasury through the Budget Facility for Infrastructure for the IF, said Rakgate.
Complementing this are R54.8bn in private sector contributions and R6.7bn in public equity.
“This funding includes innovative instruments such as first-loss capital, concessional loans, credit enhancements, tariff and interest subsidies, and viability gap funding, all designed to enhance the projects' bankability,” said Rakgate.
“By aligning resources, expertise, and finance, the IF and DBSA continue to drive socio-economic development, support sustainability goals, and enhance the attractiveness of Southern Africa as a region for impactful investment,” Rakgate said.
In March, President Cyril Ramaphosa said the country needed almost R5 trillion more in infrastructure investments from the public and private sector to achieve infrastructure goals by 2030.
BUSINESS REPORT