The European Investment Bank (EIB) is lending EUR 120 million to the South African National Roads Agency Ltd (Sanral) for the upgrade and extension of two key toll roads in northern South Africa.

The projects are of strategic importance to South Africa’s transport infrastructure, and are  part of an ongoing programme by the national authorities to upgrade and extend the road network. The planned improvements and extensions will contribute to enhanced economic competitiveness as a result of reduced transportation costs and travel times.

The loan was signed on 16 July in the EIB’s Headquarters in Luxembourg in the presence of Plutarchos Sakellaris, EIB Vice President responsible for lending activity in South Africa, and Nazir Alli, Chief Executive Officer and Inge Mulder, Chief Financial Officer of Sanral, as well as in the presence of Hon Dr A Sooklal Ambassador of the Republic of South Africa.

VP Sakellaris welcomed the third loan which the Bank has signed in the country so far in 2009. “The EIB is delighted to support the upgrade of these key toll roads; a project which is exactly in line with our objective of supporting economic growth in South Africa through the promotion of improved public infrastructure. I am convinced that this project will fulfill these goals and am confident that it will be well implemented and managed.”

This is a first for Sanral said Nazir Alli. “We thank the EIB for the confidence shown in Sanral with this loan, and in its management of the national road construction programme in South Africa”.

The EIB funding will be used to support the upgrade and widening of 30km of the R21 linking Pretoria and the O.R. Tambo International Airport near Johannesburg, as well as improvements to over 160km between Springs and Ermelo on the N17 which links Johannesburg and Swaziland.

The road enhancement schemes will bring significant safety benefits as a result of improved road alignment, the construction of emergency lanes and grade separated junctions. The project also has a strong social component as it will help to develop less advanced regions and create direct and indirect employment opportunities during the construction and management stages. Moreover, Sanral’s corporate social policy aims at promoting the advancement of entrepreneurs from previously disadvantaged groups.

The attractive terms and conditions of the EIB’s funding as an AAA-rated institution, and the fact that these long-term funds can be made available in South African rand, will bring significant value-added to this project, improving the long-term sustainability of Sanral’s toll road operations.

Background information:

EIB Activities in South Africa

The European Investment Bank (EIB) is active in Africa, the Caribbean and the Pacific (ACP) under the Cotonou partnership agreement. The Republic of South Africa is one of the ACP countries but receives EIB funding under a separate mandate. In October 2007, the EIB signed a Declaration of Intent with the Government of the Republic of South Africa, pledging financial support to the country until 2013. From 2008 to 2013, the EIB will lend up to EUR 900 million to South Africa.

The EIB cooperates with the South African authorities, public agencies, private enterprises and the financial sector to focus investment on infrastructure projects of public interest (including municipal infrastructure, power and water supply) and support for the private sector, including small and medium-sized businesses.

In 2008, the EIB supported sustainable economic development in South Africa by investing in three projects to the tune of EUR 202.5 million, almost doubling its financing activity compared with EUR 113 million in 2007.