Beitbridge reaches financial closure

The US$300 million re-development of Beitbridge border post reached financial closure recently, with work having already started.

The Zimbabwean side of the Beitbridge border post is being upgraded under a 17-and-a-half-year concession granted by the Zimbabwe to Zimborders.

Zimborders Consortium is made up of a group of Zimbabweans, South Africans, international entrepreneurs and financial institutions and experts.

The project, to be implemented under a Public Private Partnership with the Government, will be privately funded with a -17-and-half-years’ operating concession period following the completion of the construction works expected within two years.

RMB Capital, which acted as financial advisor to Zimborders, said the financial closure had been reached while media consultant for Zimborders, confirmed to The Herald Finance & Business that the commencement of works but could not provide more details.

“In many ways, this transaction blazed a trail for future deals in the sector,” said RMB in a sponsored article published in South African media.

“We were tasked with finding interested equity investors and lenders within a challenging jurisdiction and at a time of uncertainty in the global economic landscape.

“The structuring was complex, and we faced intricate challenges that had to be responded to with agility and innovation. Typically, lenders in the African project finance sector have muted appetite for market risk, a challenge that was worsened by a pandemic and the consequent economic crisis.

“In spite of these factors, considered risk analysis and bespoke structuring helped to facilitate this project achieving financial close.”

The SA based financial advisory firm said the economic impact of the transaction was significant on traders as well as the communities surrounding the border.

“The Beitbridge border post is the busiest border post in Southern Africa, connecting SA to Zimbabwe and providing a key access point for trade with countries further to the north.

“This border has been characterised by long waiting periods for trucks, sometimes days, before they got through the border, often travelling hundreds of kilometres to a different border to avoid the long queues. As a result, the border post lost traffic over time.”

The redevelopment of the border post will make it more efficient, leading to increased regional trade, benefiting the Zimbabwe economy and fiscus, and SA’s economy indirectly.

Through the concession, the development has a focused socioeconomic impact: In addition to upgrading the ageing infrastructure at the border post itself, the concession also requires the delivery of social infrastructure to the adjacent town of Beitbridge, including a water treatment plant, housing and a fire station.

Beitbridge is one of the busiest border posts in Africa, which not only connects Zimbabwe and South Africa, but also serves as the transit point for the majority of north-south trade in Southern Africa.

Research has shown that Southern Africa has witnessed an increase in the volume of commercial and private cross-border traffic.

This has put pressure on inland ports of entry as well as sea ports with the Beitbridge border post handling the largest volume of traffic in Southern Africa.

However, there had been no significant infrastructure development in the past decade. Incidences of smuggling and other illegal activities have increased. The existing infrastructure fails to contain the volume of traffic, enabling travellers to evade duty payment.-herald.clz.w