- EAIF lends $US44 million in senior and junior debt
- Comprehensive modernisation of the entire border post
- Typical waiting times set to fall from 39 hours to three hours
- Community to benefit from infrastructure transfer
The Emerging Africa Infrastructure Fund (EAIF), part of the Private Infrastructure Development Group (PIDG) is lending US$43.7 million to a US$296 million project to modernise one of Zimbabwe’s most important border crossing posts at the border between Zimbabwe and South Africa. Zimbabwe’s government has granted a 17.5 year concession to Zimborders, a private company that will rebuild or refurbish and operate the border post, which is close to the town of Beitbridge. The government expects to see the post generate significant new business investment and activity in the region, particularly in tourism, and be a boost to business and industry across the country. Currently, some truck companies take detours of up to 300km to avoid the Beitbridge bottleneck.
EAIF was able to fill a funding gap between senior debt and equity. Signing of the finance agreement took place on 30 September 2020. Financial close (when Zimborders drew the first tranche of funds) occurred on 27 November 2020
EAIF and Afrexim were the mandated lead arrangers (MLA) of the development finance institution debt. MLAs on the commercial debt were RMB, Standard Bank, Nedbank and Absa.
Alastair Herbertson at Ninety One, EAIF’s manager, says;
“As the global economy looks to minimise the damage of Covid-19, it is of greater importance than ever that transformative infrastructure is financed and built so that international trade is stimulated and goods can move across borders as quickly, efficiently and securely as possible. Zimbabwe’s new border post is a big development that will bring to an end a notorious bottleneck and help transform the region’s economic competitiveness.”
The Zimborders project has been compared with renewing every building, road, car park, office, emergency services facility and all the electricity, water, sewerage, telecommunications and IT infrastructure of a small town. The benefits of the new facility will be felt not only in Zimbabwe and South Africa, but also in those countries that import and export goods across Africa using the Beitbridge border post to access the strategic roads network serving North, South and West Africa.
The existing infrastructure is unable to cope with the huge rise in road traffic and cross-border trade Africa has seen in recent decades. Many thousands of vehicles a day use the facility. Waits of up to 36 hours are not uncommon. Truck drivers and animals in transit are often exposed to temperatures of up to 40c. The delays are costly to business and particularly inconvenient for tourist and local traffic. With new IT systems that will deliver larger and more secure revenues, more staff and enhanced traffic movement procedures, waiting times are forecast to fall to around three hours at peak times. 65% of traffic is commercial. Approximately 24% is large trucks, which contribute around two thirds of all border levies. Truck drivers will have access to modern facilities and shaded areas will be created to shelter animals from the elements.
Ownership of some of some of the new infrastructure will eventually be transferred to the town of Beitridge, including housing, water distribution, a reservoir, sewerage pipes and treatment plant and the fire station, enhancing the town’s attractiveness as an investment location.
At the peak of the construction phase of the project around 350 mainly local people will be employed. 75 new permanent jobs will be created when the facility is commisined. 35% of current staff are women, with special measures being taken to increase the percentage of women employed.