12 November 2008 – A long term foreign currently credit line for US$220 million has been signed with the African Development Bank (AfDB) and Standard Bank South Africa for support of project finance in Africa.
The money will be used to financing long term infrastructure projects within the private sector.
Standard Bank is actively involved in various projects around African, including a toll road in Nigeria and public private partnerships in South Africa.
"Obviously [we are working on] the big power tenders that the DME [Department of Minerals and Energy] and Eskom are running – that’s where much of the focus is,” said Jonathan Wood, Head of Standard Bank’s project finance division.
An infrastructure projects summit in South Africa recently reiterated that Africa is most likely going to be affected by the global credit crisis as far as infrastructure projects are concerned.
“I think it is going to have quite an impact over the next six to 12 months. The projects that are in financing are already seeing their pricing blowing out, and the terms tighten. I think some of the particularly large projects that require dollar financing are really going to struggle to close out,” Wood said.
However, Wood felt that smaller projects funded by development institutions would most likely continue as planned. “It’s important to remember there are some quite deep pockets of local liquidity in markets like Nigeria, like Kenya and South Africa, that will continue to lend in those currencies, so it’s a mixed story,” he said.
With decreasing costs for some materials such as steel, cement and fuel, industry experts are cautioning that project finance will be difficult to secure for the next six to twelve months.
“We will be pressing ahead with our pipeline, and I think projects, particularly supported by government, big infrastructure projects will probably move ahead, they may just be delayed in financial close,” Wood continued.
Commenting on government’s strategy for public private partnerships, Wood said “I would like to see a senior level workshop where we basically get agreement on the philosophical and ideological aspects of PPPs, because there are some mixed emotions and mixed views in government, as to whether the private sector should be building and operating infrastructure at all, never mind social infrastructure. I think that’s the first point. There is certainly no lack of appetite in the private sector for these deals.”