Edward West
3 minute read
1 Sep 2016
11:57

KZN ‘not exploiting potential’

Edward West

KwaZulu-Natal is an under-performer in the Overseas Private Investment Corporation’s portfolio of South African investments, in spite of significant opportunities in the province.

Durban – KwaZulu-Natal is an under-performer in the Overseas Private Investment Corporation’s (Opic) portfolio of South African investments, in spite of significant opportunities in the province.

This was according to Peter Ballinger, managing director for Opic in Africa, who was interviewed by The Witness following a recent visit to the province that was hosted by the US Consul- General’s office.

Opic is the US government’s development finance institution and is a significant funder of projects in Africa — the region now represents nearly a quarter of its global portfolio.

The development finance institution helps to grow US business in emerging markets, which means it participates in projects with some link to US business interests such as equity participation, supplier or contracting, or operational or maintenance involvement.

Ballinger said their portfolio in South Africa has more than tripled in size in the last two years, mainly because of Opic’s participation in alternative energy projects in other provinces.

He said the KZN market is dynamic and vibrant, and Opic often has to consider applications that have been referred to it by the US Consulate-General’s office in Durban.

Ballinger said one area where he believes there is good potential to help finance new projects in the province, is in the waste-to-energy sector.

Although Opic had not yet received an application for this type of investment, there clearly was scope for the conversion of municipal and agricultural waste into energy, provided the projects could sell their energy into the national grid, he said.

The province was also a gateway into other African countries through its ports, and he related how, on a recent visit to Lusaka, Zambia, the business people he interacted with their quite clearly viewed Durban as their ‘natural connection”, into and out of Africa.

He said Opic had also partnered with local banks so that project financing can be arranged in rands, guaranteed by Opic.

“Because we are developmental, we do things that often the local banks won’t do, although we don’t compete with the local banks.

“For instance, through our agreements with local banks, we might be prepared to finance a project for 12 or 14 years, while a South African bank might only be prepared to finance the project for five or seven years,” he said.

As an example of how Opic could benefit local businesses, he described Opic’s potential involvement with Protea Hotels, after the acquisition of the local hotel’s brand by US-owned Marriott Hotels.
    
Marriott is one of Opics’s biggest clients and plans to expand the Protea Hotels brand in Africa. Another possible financing opportunity that had arisen through the deal was individual Protea Hotel owners could now access Opic finance either to expand, or to bring their hotels up to the standard requirements of the Marriott group.

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