BRICS Bank’s First Local-Currency Loan Is for South Africa Roads

LAGOS (Capital Markets in Africa) – The New Development Bank, the multilateral development institution set up by members of the BRICS group of countries, has extended its first loan in local currency by providing 7 billion rand ($477 million) for South African roads.

The 15-year loan to the South African National Roads Agency SOC Ltd. will be guaranteed by the country’s government and still needs the approval of the transport and finance ministers.

“The loan will be done in local currency – a first for the NDB,” Vusi Mona, Sanral’s general manager for communications, said. “The loan will carry a government guarantee with very competitive rates.”

The New Development Bank was set up in 2015 with an initial capital of $50 billion by the BRICS countries — Brazil, Russia, India, China and South Africa – as a counterweight to the International Monetary Fund. Its aim is to fund development projects within BRICS, which includes the world’s biggest emerging-market economies. The lender said in April it plans to issue South African bonds in the third quarter to raise 4.4 billion rand for Trans-Caledon Tunnel Authority, the state-owned firm responsible for building dams and tunnels to supply water, and the Industrial Development Corp., which finances development projects.

The loan to Sanral will be used to fund expansions or upgrades to a number of toll roads, Mona said. Those projects have been stalled by the lack of expected income from the sol called e-tolls around Johannesburg, South Africa’s biggest city, and Pretoria, the capital, because of a consumer boycott. Sanral has government guarantees worth 30.3 billion rand.

Monale Ratsoma, the head of the African regional center of the NDB, declined to give further details on the terms and conditions of the loan. He said most of the projects will be in South Africa’s southeastern KwaZulu-Natal province.

Source: Bloomberg Business News