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African infrastructure gets support from the UK

March 8, 2018

The infrastructure backlog afflicting African countries could soon receive some relief from the United Kingdom’s (UK) Department for International Trade (DIT). The World Bank estimates the backlog, in the sub-Saharan region alone, to be about US$93 billion (R1,1 trillion) a year.

DIT in Africa has a presence in 21 countries across the continent and can enable the provision of these facilities through UK Export Finance (UKEF), the United Kingdom’s export credit agency, a part of DIT.

Loans can be extended in the local currencies of nine African countries for projects ranging from transportation, mining and general construction. The projects must, however, include at least 20 percent UK content and meet all other lending criteria.

“Africa’s infrastructure challenges not only inhibit its ability to trade with the rest of the world, but are also a significant obstacle to intra-African trade, both of which are critical to the continent’s economic growth agenda,” says Emma Wade-Smith, the UK’s Trade Commissioner for Africa.

“Finance is a critical component of infrastructure development and the combined risk appetite of £21,4 billion (R351 billion), which we have available to facilitate projects across the region, is a clear sign of the UK’s belief in the long-term economic growth trajectory in Africa.”

DIT in Africa has been instrumental in establishing the Africa Infrastructure Board, which brings together UKEF, the Department for International Development (DfID) as well as UK infrastructure and mining companies that are already active in Africa.

Its ambition is for the UK government and industry to work together to identify major infrastructure projects across Africa that can benefit from the UK’s extensive expertise in the fields of finance, engineering and governance, as well as health and safety.

DIT in Africa is currently tracking numerous active infrastructure projects across the continent, which it believes could benefit from UKEF funding.

One such project that has already benefited is Uganda’s Kabaale International Airport, which, when completed, will be the country’s second-largest airport, thanks to the £215 million (R3,53 billion) loan it received from UKEF in December 2017 – the largest-ever loan facility granted to an African country by the export credit agency.

“UKEF’s risk appetite for Africa has more than doubled in the last few years in line with improving economic and socio-political fundamentals,” says Wade-Smith. “The continent is becoming increasingly democratic and economically stable. This is heartening, as, in terms of infrastructure commitments, one needs to be in it for the long haul.”

FOCUS on Transport and Logistics is one of the oldest and most respected transport and logistics publications in southern Africa.

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