Nedbank Unveils Infrastructure Finance Unit

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Nedbank Corporate and Investment Banking (CIB) is gearing up to establish a new infrastructure finance division, forming a strategic restructuring initiative to elevate deal-making activities within Sub-Saharan Africa. Expected to be finalized in early 2024, the restructuring involves merging Nedbank’s existing export credit finance (ECF) with its infrastructure, water, and telecoms (IWT) finance teams.

The co-heads of the newly formed unit will be Sekete Mokgehle and Zakhele Mayisa, currently leading ECF and IWT at Nedbank. The integration aims to cultivate Nedbank’s specialized expertise in five key sectors: transport and logistics, water and sanitation, social development, digital infrastructure, and transmission lines.

Mokgehle highlights the anticipation that transport and logistics will spearhead the portfolio’s growth, encompassing roads, ports, or railways. The consolidation seeks to streamline Nedbank’s deal application processes, simplifying infrastructure-related financing through a unified entry point.

The ECF unit traditionally offers loans to African sovereigns supported by export credit agencies, commercial insurers, or multilateral agencies. Meanwhile, IWT specializes in off-balance sheet project financing. The merger intends to eliminate redundancies and create a cohesive approach to infrastructure financing.

This strategic move by Nedbank coincides with a broader transformation in its export finance strategy, responding to market challenges. Mokgehle mentions the bank’s shift away from down payments, citing the OECD’s decision to reduce the down payment requirement on export credit agency transactions to 5%, which impacted the business.

In response to these challenges, Nedbank is exploring alternative avenues, approaching sovereigns to structure deals with 100% insurance-backed solutions. For instance, earlier this year, Nedbank’s export finance team collaborated with pan-African lender Ecobank to arrange and fund a €50 million term loan for the Côte d’Ivoire government.

The bank plans to provide training to current ECF and IWT staff on utilizing each other’s products and aims to expand the infrastructure team beyond its current size of 16 employees, based in South Africa and the UK. Mokgehle emphasizes the need to bolster the team in London to leverage project finance offerings and foster collaborations with European banks seeking mandates in Africa on a risk-sharing basis.