African Export-Import Bank (Afreximbank) has approved US$70 million to finance the expansion and upgrade of the Beitbridge border post to facilitate trade in Southern Africa.
The financing facility forms part of a US$204.4 million syndicated senior term loan facility for which Afreximbank was among a consortium of financial insitututions acting as Mandated Lead Arrangers and Senior debt Lenders.
This comes at an opportune time where the Africa Continental Free Trade (AfCFTA) is in force on the African continent with the aim of deepening economic integration, creating a single market for goods and services, facilitate the movement of persons, promote industrial development as well as achieving sustainable and inclusive socio-economic growth.
Current estimates by TradeMark Southern Africa (TMSA) indicate that a truck takes about five days to be cleared at the border post, creating additional “dead-weight” transport costs for importers.
Reflecting on the project, Prof. Benedict Oramah, President of Afreximbank, said that the improvement of the Beitbridge border post was critical to reducing costs associated with traffic delays, and in turn increasing trade in the Southern Africa region in furtherance of Afreximbank’s drive to boost intra African trade.
“It is too costly to wait for almost five days at the border to deliver goods and services across Southern Africa. With this facility, we aim to cut indirect and direct costs of trade associated with border post effectiveness and efficiency”.
Prof. Benedict Oramah
Out of the US$70 million, Afreximbank authorised a US$43 million senior term loan facility to Zimborders Mauritius Ltd and the issuance of an Investment Guarantee of US$27 million supporting Pembani Remgro Infrastructure Fund to join other investors in Zimborders Mauritius Ltd.
The Beitbridge border post upgrade project, which is a public-private partnership, is the first of its kind in Zimbabwe. It is funded by African financial institutions that have come together to provide commitments in the syndicated senior term loan facility. In addition to Afreximbank, other participating financial institutions include the FirstRand Bank Limited, ABSA Limited, Nedbank Limited, Standard Bank of South Africa and The Emerging Africa Infrastructure Fund.
The upgrade will include the procurement of technical equipment and software, thus modernizing the border post to ensure smooth service during the concession period. In addition, investments will be made in Beitbridge town, including developing a fire station, residential building units, housing sewer lines, housing electrical supply lines, a reservoir, water pipelines, a wastewater treatment plant, a water pump station and other infrastructure.
In Matabeleland South province, the Beitbridge border post embodies the political border between Zimbabwe and South Africa and is the busiest border crossing in Southern Africa. The border post is the key access point to trade with surrounding countries to the north and its upgrade will significantly reduce waiting periods that have hampered and slowed trade across Southern Africa, causing haulage operators to use longer, less efficient alternative routes.
Finally, the approval of the loan facility and investment guarantee to upgrade the border post will greatly reduce waiting times and improve its operational efficiency and effectiveness.
