Nedbank CIB is set to launch a new infrastructure finance division as part of a restructuring aimed at boosting deal-making activity in Sub-Saharan Africa.   

As part of the move, slated to be finalised in early 2024, the South African bank will merge its existing export credit finance (ECF) with its infrastructure, water and telecoms (IWT) finance teams.  

The unit will be co-headed by Sekete Mokgehle and Zakhele Mayisa who currently lead ECF and IWT, respectively, at the bank.  

Through the merger, the bank aims to develop Nedbank’s specialist expertise in five key sectors: transport and logistics; water and sanitation; social projects; digital infrastructure; as well as energy infrastructure.  

“We expect transport and logistics will be the number one driver of the portfolio, whether that be roads, ports or railways,” Mokgehle tells GTR 

The merger will also simplify Nedbank’s deal application processes as both the existing teams largely target African infrastructure already but via different types of financing and products, Mokgehle says.  

The ECF unit provides loans to African sovereigns backed by export credit agencies, commercial insurers or multilateral agencies, while IWT specializes in off-balance sheet project financing.   

“[The merger] creates an opportunity to scale up our offering to the market. Sometimes opportunities would move between the two teams before landing on the right desk, so it made sense to combine the two businesses and to create a single-entry point for infrastructure,” Mokgehle adds.   

The launch comes amid a broader shift in Nedbank’s export finance approach in the wake of growing challenges in the market.  

Local lenders say the OECD’s decision to reduce the down payment requirement on export credit agency transactions to 5%, a temporary rule which ran from late 2021 and only ended last month, squeezed a “significant” area of their business.  

“We are seeing limited down payment financing opportunities. The OECD and the banks installed this 5% down rule and the likes of Angola – on the back of high oil prices – have been paying the down payment themselves,” Mokgehle tells GTR 

“We have [instead] seen activity related to the financing of sovereigns using commercial insurance-backed solutions.”  

For instance, earlier this year, Nedbank’s export finance team partnered with pan-African lender Ecobank to arrange and fund a €50mn term loan for the Côte d’Ivoire government, bolstering the state’s 2023 fiscal budget.  

Nedbank will retrain current ECF and IWT staff on how to use the other teams’ products and will look to grow its South Africa and UK-based infrastructure team.