Africa has made significant progress in terms of infrastructure development, committing billions of dollars to improve its transportation, energy, water, and digital networks. This infrastructure boom is crucial for boosting economic growth, creating jobs, and reducing poverty across the continent. With the right investments and reforms, Africa can build the modern infrastructure needed to boost trade, create jobs, and transform the continent’s economic prospects.
Yet current investment still falls far short of demand. According to the African Development Bank, the continent has a $100 billion annual shortfall in infrastructure financing. This infrastructure gap is not only impacting lives today, but also significantly curtailing the continent’s potential for economic, entrepreneurial, and developmental progress. The African Union estimates that inadequate infrastructure has led to the reduction of national economic growth by 2% annually in most African countries and as much as 40% reduction in industrial productivity.
If we manage to close this gap, we unlock the immense potential of infrastructure – and especially sustainable infrastructure – to drive growth and development on the continent. There is a real desire amongst state-owned companies (SOCs) to do so, and an increasing awareness amongst investors of the alignment of interests that opportunities in African infrastructure represent.
We have noticed, in particular that Gulf Cooperation Council (GCC) countries have stepped up their investments in Africa as they look to diversify their own economies. The GCC’s strategic policy priorities and economic diversification interests align perfectly with the opportunity to support Africa’s development agenda, and the GCC is equipped with the technical expertise and financial resources necessary to bridge Africa’s investment gap through innovative public-private partnerships (PPPs).
Over the past decade, the GCC has emerged as a major investor across Africa, with a growing number of trade deals finalised that significantly benefit both regions. Dubai is increasingly establishing itself as the gateway to African investment. Investing in Africa, and developing relationships with SOCs and financial institutions, allows GCC nations to access new markets, expand business operations, and secure access to abundant natural resources. The GCC states generally have superb relationships with many of the 20 countries in which our Group has a universal presence, which is an important foundation for the development of effective PPPs and direct investment projects.
Iconic transactions of late include the acquisition of Imperial Logistics, a South African logistics operator, by DP World, the global infrastructure-led supply chain solutions provider based in Dubai. As a result of this transaction, DP World gained a stronger foothold in Africa and Imperial Logistics benefitted from DP World’s leading technology, global networks, and key trade-lane volumes. It’s a win for DP World and Imperial Logistics – the two are clients of the bank.
Another success has been our partnership with DP World to offer trade finance solutions to African SMEs, which will help in closing the gap in unmet demand for working capital on the continent. This partnership reflects our strategic vision of driving Africa’s growth, and is a demonstration of our commitment, as Africa’s largest bank, to the transition of financial services to platform-based ecosystems and to the improvement of client experiences.
ESG and the broad-scale sustainable impact of our work is a key focus area for Standard Bank, and this aligns with the appetitive for sustainability that we’ve seen from the UAE. UAE investors are sophisticated supporters of the vision of more circular economies and are making a demonstrable impact in enabling a just transition for the continent.
Spurred by the benefits of economic diversification, GCC countries are actively investing in high-growth sectors such as clean energy, manufacturing, and logistics, while also committing to sustainable development projects including food and water security. Against this backdrop, the opportunities in African infrastructure align seamlessly with the GCC states’ multi-sectoral investment appetite.
We have, for the past four years, facilitated the State-Owned Company Investment Summit, which introduces large sovereign-owned companies to investors from the MENA region. Each year we record tangible, significant successes as a result of the summit.
It was as a result of last year’s Investment Summit that Standard Bank was able to facilitate a unique syndication facility for the Development Bank of Southern Africa in the UAE. The US$255 million facility was the first of its kind to be successfully accessed by a South African state-owned entity in the UAE and broader Middle East/North Africa (MENA) markets, representing a milestone for both DBSA and for South African fundraising initiatives in the UAE.
Standard Bank and UAE-based Mashreq were joint lead mandated arrangers in a deal which was oversubscribed, demonstrating significant market interest from UAE investors and the MENA broader region. The DBSA mandated Standard Bank to act as the mandated lead arranger to anchor and raise US dollar liquidity to diversify its global investor base.
Standard Bank is actively involved in supporting effective PPPs by demonstrating the economic value that derives from these projects, and through the rigorous governance structures that we’ve optimised. Risk is managed through an end-to-end process that takes deep cognisance of the value chains that are required for doing business in Africa, and which gives our partners comfort and security and the confidence to engage in these beneficial transactions.
There is nothing exceptional in terms of the risk projects face in Africa. What is unique is the degree to which local knowledge is able to ameliorate risk. In more mature markets, there isn’t the same degree of guidance required. In Africa, an experienced hand guiding the process is far more valuable.
Doing business in Africa requires an understanding of cultural sensitivities and experience as to what works. Africa is not a country: it is a continent made up of 54 disparate nations with unique operating environments. Our continental expertise is born of on-the-ground experience and a commitment to innovative, world-leading funding and risk-management solutions.
We believe in Africa, and we’re committed to its success. The vast proportion of our balance sheet is deployed in Africa. We have 50 000 experienced, knowledgeable staff who drive our return on equity. We have a universal presence in 20 African countries. We have offices in Dubai, Beijing, London and New York, and expect our new representative office to be opened in Egypt by year end. This will allow us to capitalise on the significant emergence of the Gulf–sub-Saharan-Africa–Egypt corridors, and further support our clients in those corridors.
The future looks bright for the cross-border opportunities available across Africa. As the largest bank in Africa, our largest stakeholder, in a sense, is the continent itself. That awareness drives our partnerships with multinationals, regional corporates, state structures and sovereign funds to enable cross-border flows – because they are critical catalysts of African growth and significant opportunities for value creation.
