South Africa chasing after private investors with new R8 billion plan
South Africa plans to list its first credit-guarantee vehicle (CGV) that’s being established to unlock private investment in infrastructure.
The National Treasury, with technical assistance from the World Bank, is making good progress on setting up the vehicle, Director-General Duncan Pieterse said in a speech at an Absa consumer conference on Tuesday.
“We have appointed an interim board for the CGV and are currently finalising the requirements to license and list the entity,” he said.
This entity will mobilise private finance at scale for mega-projects such as the expansion of South Africa’s electricity transmission network, he said.
The vehicle, which will serve as a form of private insurance, will initially get as much as R1.64 billion – of a total R8.2 billion capital base – from the Treasury via a loan from the World Bank, and the rest will come from development financial institutions, the Washington-based lender said in a document.
Over time, further investment could bring the capitalisation of the CGV to R45 billion, it said.
The plans form part of President Cyril Ramaphosa’s drive to lift growth by overhauling ports, rail, power and water infrastructure, with the aim of raising the economy’s expansion rate to 3.5% by 2030 from less than 1% a year over the past decade.
That effort is underpinned by a shift toward investment in South Africa’s state budget.
Expenditure on new infrastructure, maintenance and refurbishments is now the fastest-growing component of the budget, rising by almost 10% a year over the medium term.
The government has also, in recent months, attracted new forms of funding for public investment. In December, it raised R11.8 billion in the debut issuance of a new infrastructure bond and R4.4 billion in July.
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