JOHANNESBURG, Mar 10 – South Africa is preparing to significantly expand a new credit-guarantee programme aimed at unlocking large-scale private investment for infrastructure development across the country.
The initiative will support projects ranging from electricity grid expansion and water systems to improvements in ports and freight rail infrastructure.
The programme will be overseen by the Development Bank of Southern Africa, which says the vehicle is designed to mobilise private capital while reducing pressure on government finances.
According to Mpho Mokwele, the initiative is expected to inject significant funding into infrastructure projects within a short period.
The credit-guarantee mechanism is the first of its kind in South Africa and is intended to limit the need for sovereign guarantees previously extended to state-owned companies. Those guarantees currently amount to about 661 billion rand, roughly $40 billion.
President Cyril Ramaphosa’s administration plans to accelerate infrastructure spending in Africa’s most industrialised economy, allocating about 1.07 trillion rand for infrastructure development over the next three fiscal years.
The new credit-guarantee vehicle will complement this strategy and is expected to mobilise up to four times its initial $500 million capital base as it gains market confidence and secures credit ratings.
The fund has already secured $350 million in support from the World Bank through its International Bank for Reconstruction and Development.
Additional financial backing may come from several global development finance institutions, including the African Development Bank, the International Finance Corporation, Germany’s KfW and the Industrial Development Corporation.
A commercial bank within South Africa has also indicated interest in participating in the fund, although officials said the institution will be named only after a final agreement is reached.
Under the structure being considered, the National Treasury of South Africa could take up to a 20% equity stake in the vehicle, while state entities including the Development Bank of Southern Africa may raise total public ownership to around 30%.
The financing vehicle will play a key role in major national infrastructure initiatives. South Africa’s plan to expand its electricity transmission network by about 14,000 kilometres to connect renewable energy projects in the western regions is expected to cost approximately 440 billion rand.
Modernising ports and freight rail infrastructure could require an additional 330 billion rand in investment.
The programme is also expected to support projects under institutions such as the Trans-Caledon Tunnel Authority, which manages major bulk water supply projects.
Officials say the initiative will also help attract investment into logistics and other public-sector infrastructure through a specialised participation unit being managed by the Development Bank of Southern Africa.
