Innovative Infrastructure Financing Options on the Cards for KwaZulu-Natal
Durban, Tuesday, 8 October 2013 – An innovative Infrastructure Funding Fair later this month promises KwaZulu-Natal municipalities and provincial departments struggling with service delivery backlogs the opportunity to secure financing for multi-million-rand projects.
The partnership between the KwaZulu-Natal provincial government and Deloitte KZN follows the success earlier this year that saw more than R300 million secured for corporate development projects. The inaugural Funding Fair, hosted in partnership between Deloitte KZN, the KZN Provincial Treasury and the KZN Department of Economic Development and Tourism, saw face-to-face contact between project promoters, entrepreneurs, business development bodies, venture capitalists, private equity investors and debt funders.
The Infrastructure Funding Fair builds on the existing concept, recognising that provincial government cannot resolve the municipal infrastructure backlog with its current resources. South African municipalities and government departments have fallen behind on social infrastructure spending and development, including water and water-borne sewerage, roads, taxi ranks, schools and clinics, since the 1980s.
KZN Provincial Treasury General Manager for Infrastructure Management and Economic Services, Clive Coetzee, says that the Development Bank of Southern Africa in its 2012 report entitled The State of South Africa’s Economic Infrastructure: Opportunities and Challenges stated that governments around the world rank infrastructure policy among their greatest concerns. Furthermore, the World Economic Forum in its 2012 report Strategic Infrastructure Steps to Prioritize and Deliver Infrastructure Effectively and Efficiently, stated that infrastructure investment, whether it is maintaining existing networks or building new assets, is critical to economic progress. “It is clearly evident that most countries are not investing enough, which is hampering their growth prospects and deferring an ever increasing burden to our economy as well as to future generations,” says Coetzee.
Deloitte KZN Corporate Finance leader, André Pottas says there were growing numbers of requests for funding proposals for infrastructure projects and the Infrastructure Funding Fair was a means by which to bring together the parties for mutual benefit.
"Despite government funding being available via the Municipal Infrastructure Grant (MIG), there is insufficient capital for meeting service delivery requirements, especially in historically underserviced areas. This means funding must be sourced from alternative financiers and the Infrastructure Funding Fair provides a platform for translating those requests into reality," Pottas says.
Funding options include public private partnerships, concessions and loans from local and international development finance institutions. While the rest of Africa remains the key investment concern for international donor funding, Pottas confirms the local market still attracts capital.
Funders invited to attend the full-day event on Thursday, 24 October 2013 include commercial banks, development finance institutions such as the Development Bank of South Africa (DBSA), the European Investment Bank (EIB), the German government-owned development bank KfW, Ithala Development Finance Corporation and the Industrial Development Corporation (IDC).
“China's drive into Africa, coupled with South Africa's entry into the Brazil, Russia, India, China, South Africa (BRICS) trading bloc, was also drawing investments from that quarter. Consequently, the Infrastructure Funding Fair includes Chinese construction companies and banks which typically bring their own financing options when developing projects. Indian and Brazilian construction companies are also increasingly active in Africa, and have been invited to attend,” states Pottas.
Local construction and engineering companies and other interested parties are welcome to attend. Pre-registration via www.kznfundingfair.co.za is essential.
Deloitte Corporate Finance senior manager Leon Bezuidenhout says projects on the table range from multi-billion-rand initiatives, such as roads, bridges, and new schools, to smaller projects that could resolve regional developmental issues and improve the quality of life for local communities. Smaller projects that will be presented include, for example, the refurbishment of historically poorly maintained and dilapidated sewerage treatment plants, community halls, libraries and museums.
The Richards Bay Industrial Development Zone (IDZ) and the KZN Sharks Board have also submitted proposals to pitch proposed projects.
Currently, 15 municipalities and provincial government departments have indicated their willingness to present, in total, 60 potential projects to the Infrastructure Funding Fair. The will also be an exhibition which will provide participants the opportunity for one-on-one discussions and also give them the opportunity to showcase innovative technologies.
"Deloitte is committed to the growth of KwaZulu-Natal and sound municipal infrastructure is a critical element for ensuring economic growth and development, says Guy Brazier, Office Managing Partner, Deloitte KwaZulu-Natal.
Municipalities recognise the value in working together to develop key social infrastructure. Their responsibilities to provide infrastructure into previously disadvantaged areas were ignored before 1994 in favour of maintaining the existing infrastructure in former white suburbs.
"The reality is this cannot be achieved via MIG alone and the Infrastructure Funding Fair. Aimed as an annual event, the fair can become the platform for reaching social infrastructure delivery goals," Brazier says.
The Funding Fair will be held on Thursday, 24 October 2013 at the Pietermaritzburg Royal Showgrounds. Entrance is open to pre-registered interested parties. Additional information can be found on the KZN Funding Fair website.