South Africa - International Franchise Association

may see closer cooperation with private funders and operators.
National or provincial governments will generally publish tenders, requiring consortia to
respond to PPP-type projects. This is different from normal infrastructure tenders in that all
the funding is privately raised. The concessionaire will usually be required to build and
operate the infrastructure for an extended period of time, taking the risks and rewards that go
along with such an endeavor.
Project finance in South Africa generally exhibits the following characteristics:
• Long-term tenders, to match the underlying concession contract with government.
• Limited recourse, meaning that the lender takes on the project risk.
• Involvement of more than one bank, owing to the large amounts of debt.
• Very high gearing as infrastructure is a low-risk asset class, and there is usually no
or very limited market risk being taken by the funders. This results in lower
shareholder equity requirements.
Most of the current deals in the PPP sector involve building and operating the project; the
most profiled recent example is the now commissioned Gautrain high-speed passenger rail
connection between Johannesburg, Pretoria and OR Tambo International Airport.
The Government has a dedicated PPP unit in the National Treasury, whose task it is to
oversee new and existing projects. Their website, http://www.ppp.gov.za/Pages/default.aspx,
gives further details around PPPs.
A current list of PPP projects appears here:
http://www.ppp.gov.za/Lists/PPP%20Project%20List%20Master/Master%20Project%20List.a
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Sources of Project Financing in South Africa
U.S. Trade and Development Agency (TDA)
The U.S. Trade and Development Agency promotes economic development in developing
countries by funding feasibility studies, consultants, training programs, and other project
planning services. In Africa, TDA assists U.S. firms by identifying major development
projects that offer large export potential and by funding U.S. private sector involvement in
project planning. This, in turn, helps position U.S. firms for follow-on activities during the
implementation phase of the project. For additional information contact:
Mr. Jason Nagy, Country Manager
Tel: +27 (0)11 290-3084
Email: jnagy@ustda.gov
Website: http://www.tda.gov/
Development Bank of Southern Africa (DBSA)
The DBSA is one of five existing development finance institutions in South Africa and has a
mandate to accelerate sustainable socio-economic development in the region by funding
physical, social and economic infrastructure. Contact:
Mr. Paul Baloyi, CEO
Development Bank of Southern Africa
Tel: +27 (0)1- 313-3911; Fax: +27 (0)11-206-3516
Email: Paulb@dbsa.org
Website: www.dbsa.org