The head of the US federal government’s Export-Import Bank (Ex-Im) has confirmed that the organisation is keen to support the financing of infrastructure projects in South Africa and that the country has been identified as one of nine globally where it aims to increase deal flow in the coming years.
The only other sub-Saharan African country identified for priority support is Nigeria.
Overall, during the fiscal year to September 30, the bank, which is the offi- cial export credit agency of the US and assists in financing the export of American goods and services to international markets, authorised a record $24,5-billion in loans, guarantees and insurance.
During a trade mission to South Africa last week, chairperson and president Fred Hochberg confirmed that the initial South African-linked transactions were likely to involve State-owned enterprises Transnet and Eskom.
Hochberg told Engineering News that both transactions were still in the preliminary stages, but that the Transnet-linked deal, which required Congressional approval, could be finalised in early December.
He said steps were being taken to approve financing of $300-million for the export of locomotives and locomotive kits to Transnet.
The transport utility is currently buying 100 diesel-electric locomotives from GE South African Technologies in a contract worth about R2,4-billion. But the freight logistics group has also indicated that it could buy between 75 and 100 locomotives a year over “a prolonged period” to reduce the average age of its locomotive fleet from 30 years to below 20 years.
Hochberg also confirmed that an initial review of Eskom’s R142-billion Kusile coal-fired power plant had opened the way for a possible transaction to finance the sale of engineering services being supplied by a US firm to the utility.
The review of the power plant was pursued under Ex-Im’s “enhanced due diligence process for high-carbon-intensity facilities”, and its board had subsequently decided to proceed with a full financial, technical and environmental review of the project.
Following that review, the transaction to finance the sale of services to Eskom by Black & Veatch, of Kansas, will return to the board for “final action”.
In the private milieu, Ex-Im recently gave final approval for $7-million in financing to support the sale of five new Caterpillar off-highway trucks and one new tractor to Eqstra Holdings, a JSE-listed capital equipment group.
“South Africa is a dynamic economy with a growing appetite for infrastructure development,” Hochberg said, adding that US companies and competitive Ex-Im financing would be available to support the infrastructure roll-out and other purchases by small and medium-sized businesses.
Hochberg also signed a memorandum of understanding with South Africa’s Export Credit Insurance Corporation, under which the two agencies would exchange information on trade and business prospects in order to identify opportunities for cooperation, including cofinancing opportunities in sub-Saharan Africa.
During his visit, Hochberg met with a wide range of private- and public-sector leaders, including representatives of South Africa’s Department of Public Enterprises and commercial banks, as well as Eqstra, Transnet and Comair.