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Sectors 1 November 2021

Transport Infrastructure can pave the road to economic growth in Southern Africa

As we look to rebuild the South African economy in the wake of the devastating impact of the COVID-19 pandemic, corridor financing could hold the key to putting the country and continent on a path to sustainable and inclusive economic growth.

Economic activity and connectivity are inextricably bound together. Therefore, plans to stimulate economic growth must include the development and expansion of transport infrastructure as a priority. Without reliable routes to market, we will not be able to attract the investment required to put us on a road to long-term, sustainable economic growth.

"Investing in port infrastructure does not only have a considerable downstream impact on the economy of the host nation, but it also has an enormous impact on neighbouring countries who make use of the port.'', says Aadil Cajee, Head of Infrastructure at Standard Bank.

The Maputo corridor is an excellent case study of what can be achieved. Standard Bank has been tracking this development for almost 20 years. Our involvement commenced in 2003 following the Mozambican government's decision to award a private concession for the Maputo port. At the time, port volumes were less than 10% of those pre-civil war. The development of the port infrastructure, including an aluminium terminal, created a much shorter distance to market for South African products, including commodities and motor vehicles. This led to further port expansions and the development of transport nodes, including the N4 highway in South Africa.

The development of the N4 highway linked historically rich mining towns such as Middleburg and Witbank to the Maputo port, allowing large growth in the export of commodities due to the simpler route to market. In turn, all the towns along the transport route saw a pickup in economic activity. Ultimately, one value chain was created that was interdependent for its success. It also highlights the importance of developing and industrialising the downstream value chain - for example, manufacturing plants to supply port equipment.

"Corridor financing helps to stimulate economic activity with enterprises and industries popping up along transport nodes. It encourages industrialisation, attracting people and capital - in turn creating employment opportunities. Industry starts to develop organically, spurring economic growth.'', says Cajee.

At Standard Bank, we see the transportation value chain as foundational in our business strategy. We have deep sector experience and have been involved in financing and advising on a range of such infrastructure projects across the continent.

This includes the Maputo Port, the expansion of two ports in Cote d'Ivoire, the Kenya Roads Programme in East Africa, and recently the upgrade of the Beitbridge border post between South Africa and Zimbabwe that will pave the way for enhanced integration and development in the SADC region.

There can be no doubt that corridor financing and investing in the transport value chain is key to economic recovery and growth not only in South Africa, but across the African continent. Standard Bank has a vested interest in enabling Africa's growth, and we continue to remain optimistic about the future of the continent and our role in supporting the implementation of economic growth strategies.