Old Mutual’s Infrastructure, Development and Environmental Assets (Ideas) fund has availed $90 million for upgrading of the Beitbridge Border Post between South Africa and Zimbabwe over the next 18 months.
Ideas fund portfolio manager Kingdom Mugadza said the border post is important to the economies of sub-Saharan Africa and is the busiest link into the region as over 10 million tonnes of cargo passes along the corridor every year.
“The $90 million contract value represents one of the largest investments into Zimbabwe in the recent past,” Mugadza said.
He said under the project, South African Infrastructure Investment Company (SAIIC) will upgrade the border post, construct the main access road to the border, provide a weighbridge facility and houses for government employees at the post.
SAIIC is a joint venture company formed by Old Mutual, Sanlam, Nedbank and NLP to develop and operate infrastructure in the region.
Mugadza said according to research carried out by the UK’s Department for International Development, transport cost is between 30%-40% higher in Africa than developing regions indicating a drag in regional trade and economic development.
“Furthermore, in sub-Saharan Africa, transport costs absorb more than 20% of foreign export earnings, rising up to 50% in some landlocked nations,” Mugadza said.
He said poor infrastructure at the border post meant it takes an average of 34 hours for a truck to cross the border’s northern end and 11 hours at the southern end.
“If the cost of trucks waiting at border posts is $100 million per annum — as estimated by the Road Freight Association of South Africa — then an overhaul of the systems and infrastructure at Beitbridge in order to reduce the cost of trade along the north-south corridor is long overdue.”
He said Old Mutual has over $1,5 billion in infrastructure investments across the region, ranging from public-private-partnerships to clean energy investments.