Our presence at the 14th India-Africa Conclave in Delhi in India shows our commitment to nurture and grow the economic trade corridor between India and Africa.
Contact us about how we can assist you on making your strategy a reality. We look forward to being your foreign investment partner of choice during this prestigious event.
Insights from our thought leaders
Some of the pertinent topics to ensure long-term growth and explore growth potential and investment opportunities across multiple trade sectors include:
- Financing Indian investments in a changing Africa
- Bridging Africa’s connectivity and infrastructure gaps
- Harnessing the digital potential of Africa
We can assist you with:
- Liquidity management - overnight and term deposits as well as money market funds.
- Cash management - common internet front-end, a wide variety of collections and payments instruments, SWIFT capabilities and the largest branch network in Africa.
- Trade and working capital - working capital financing, distributor and supplier financing, asset financing, bonds, guarantees and indemnities and import/export financing.
- Risk management - full foreign exchange and interest rate capabilities, a well-rated risk management bank (Number 1 in South Africa), as well as full hedging product capabilities to the extent possible in each country.
- Card issuing and acquiring - a comprehensive card offering in South Africa with MI integration capabilities, selective card proposition in rest of African markets, full end-to-end payment processing solutions available.
- Investment banking - full capabilities delivered from South Africa across the region, including advisory, equity capital markets, mergers and acquisitions, financing solutions across LCM, debt capital markets, leveraged and project finance, sales, trading and leading research.
Africa is a continent blessed with an abundance of natural resources – water, wind, thermal coal, natural gas, and of course plenty of sunshine – but the electrification rate across the continent remains extremely poor. Of the 1.2 billion people who live in Africa, it’s estimated that more than 650 million have no access to energy, relying instead on fossil fuels like diesel for electricity generation and harmful cooking fuels like wood, charcoal, and kerosene. This sets our continent back on meeting energy access goals, restricts industry progress, and diminishes the continent’s economic growth by two to four percent every year1.
Developing countries across Asia are all making significant progress, with many countries currently well on track to reach universal energy access by 2030, while India, with a 1.34 billion population, is on track to reach universal access by the early 2020s2.
Looking forward, financing Africa’s energy infrastructure is a major opportunity for investors. Africa’s power and energy sectors are critical drivers of growth and development across the continent – so to ensure the industry reaches its full potential and addresses the needs of citizens, investors and businesses must keep up with a rapidly changing African energy landscape. For example, South Africa hold two thirds of the power generation capacity in sub-Saharan Africa (circa 46,000 MW). Granted our dominant industries like mining are heavily energy reliant, but this simply goes to show the enormous opportunity that exists for investment into power supply infrastructure in the region.
But what kind of power are African countries investing in?
More and more countries and companies worldwide are focusing on green energy and investing in low-carbon technologies – a trend that became more pronounced following the commitments made at the COP 21 United Nations Climate Change Conference in late 2015. Fortunately, developing economies are in a unique position to leapfrog more developed nations by investing in cleaner, more environmentally friendly sources of power at a lower cost, which is one of the key factors contributing to improved use of renewable energy power across the continent.
Currently, countries like Morocco, Tanzania, Mozambique, Kenya, Mauritius, South Africa, Uganda and Ghana amongst others have taken initiatives in the development of renewable and clean energy projects, particularly solar and gas to power. With the current low cost of gas compared to several years ago, (through the shale gas revolution in the USA) gas power plants have increasingly become more competitive compared to clean coal technologies and present an affordable solution for developing nations on the continent.
Lithium-ion batteries could be a game changer for Africa.
Although renewable energy resources hold great promise and can provide energy while overcoming Africa’s infrastructural challenges, this form energy would still need to be stored. There’ve been massive investments in the field of battery storage research and development by leading global companies like Samsung, Tesla, Total and BYD over the past five years. The trend is likely to continue and will gain momentum going forward. As the costs of Li-Fe battery storage falls, coupled with already low cost of solar photovoltaic modules, the future of the electricity market may well be solar photovoltaic plants. This, combined with Li-Fe battery storage to despatch energy as and when needed, would in time displace CSP technologies, which by comparison is costly.
South Africa holds almost 80% of the world’s known reserves of manganese (producing 5.3 million MT per annum) – an important component of the Lithium-ion battery. The price of manganese is relatively low, so manufacturers have been able to import it easily from South Africa. A growing market will eventually justify the creation of a local battery production plant, but serious investment is first required for a large-scale facility.
There is huge opportunity for businesses involved in building transmission networks.
There are five regional power pools in Africa (Southern, Eastern, Western, central, Northern). The electricity grid in each of these regions is largely disjointed, and unlike Western Europe or North America, there is little cross-wheeling of power across regional power pools. There are several interconnector projects across Africa being tendered by utilities with the aim of progressively connecting the various power grids, which would address the current supply-demand imbalance of power in certain jurisdictions.
Demand for rail in Africa will increase significantly over the next decade.
South Africa is said to have about 18,200 kms of rail network which represents about two thirds of functional rail in Sub Saharan Africa (SSA). Except for South Africa, the railways of SSA have been in decline since independence.
Competition from road, political instability, corruption, poor management and lack of investment have left most African railways with very old rolling stock, and infrastructure that is in poor condition. Most railways remain owned by national Governments, while some have their operations and maintenance concessioned out to the private sector. Most struggle - governments generally lack the required budget; rail utilities are often not creditworthy; and resources or expertise to develop complex projects like rail are lacking. With the need to exploit and transport new bulk commodity (coal, iron ore, manganese) projects to port in Africa means that demand for fully functional rail networks is set to increase significantly over the next decade.
About Bhavtik Vallabhjee
Head: Power, Utilities and Infrastructure at ABSA
Bhavtik Vallabhjee has over 22 years of corporate and investment banking experience in South Africa and in the Middle East. He has been engaged in structuring major project finance transactions in various sectors including power. He has worked on deals in several Middle Eastern and African countries and executed transactions with an aggregate value in excess of US$23bn in his career. He has been extensively involved in the South Africa Renewable Energy program since its inception. Bhavtik is a Director at Absa Corporate and Investment banking, where he heads up the Power, Utilities and Infrastructure unit. He is a Chartered Management Accountant (UK), with an MBA in Finance and two Honours degrees.