JSE-listed construction firm Raubex will be the primary contractor on the $241 million Beitbridge border upgrade, South Africa’s Business Day has reported.
Early this year, the Zimbabwe government handed the border modernisation concession to Zimborders, a consortium of local and international investors led by the La Frontiere Group, after the tendering had been stalled by infighting in former President Robert Mugabe’s fractious administration.
Raubex, which has infrastructure, road construction and earthworks as well as materials divisions, reported 8.5 billion rand (US$640 million) revenues in the year to February 2018 and sat on an 8 billion rand (US$600 million) order book at the close of the period. Raubex says it is aggressively pursuing opportunities on the continent, as the South African construction slowdown continues to weigh on the company’s order book.
Apart from infrastructure work in South Africa, where the state roads authority accounts for 25% of Raubex’s order book, the company has also undertaken projects in Namibia, Zambia and Cameroon.
The Beitbridge border, which processes an average 15,000 people and 500 trucks daily, is one of Africa’s busiest inland ports, providing a gateway to South Africa, the continent’s most advanced economy. Zimbabwe and its southern neighbour are working towards making the transit point a one-stop border post.
Glynn Cohen, a Zimbabwean logistics investor who founded the GDC Whelson transport company, is leading the Zimborders consortium with his business partner Francois Diedrechsen.
Diedrechsen is a former Raubex chief executive officer and holds the same position at Zimborders, while Cohen is chairman.
The two men jointly own the La Frontiere Group, whose primary focus is on border post construction. Although the other members of the Zimborders consortium have not been revealed, they are believed to include some institutional funds which have undertaken to put up some cash to bankroll the project.
Some international commercial banks will also provide some debt funding for the project.
President Emmerson Mnangagwa officially launched the border project last week. Transport minister Joram Gumbo told NewsDay that Zimborders had won a competitive tender for the project last year, but hit a brick-wall after Mugabe insisted on government funding the project, which he also wanted carried out by locals.
Diedrechsen told CNBCA that Zimborders would raise funds to the project in terms of the concession’s financing structure.
“Bearing in mind that this is a concession job, we will be collecting revenue from a tolling perspective, post-completion. We will be collecting in US dollars, we are funding the project in USD so, from a currency risk perspective, (to) us as a business (it) is fairly neutral,” Diedrechsen said.
“We will provide the money, we will provide the expertise to build it and to run it thereafter for the duration of the concession period and, in that way, make our returns.”
The concession will last for 17 years.
The project is expected to reach financial closure before the end of 2018, with construction, scheduled to take two years, expected to start shortly afterwards.
“There will be challenges all the way through and even after,” Diedrechsen said. “It’s a tricky job in the sense that it’s not a site we can shut down. It needs to remain functional while we do the upgrade and the modernisation. So it will be scheduled work.”
Part of the project works include a major upgrade of roads leading into and out of the border post, perimeter fencing and gate control infrastructure, parking areas, a commercial centre, staff accommodation, upgrading of communications, security and lighting systems, as well as the construction of new buildings and terminals.
The project will also upgrade Beitbridge town’s critical infrastructure, such as sewer ponds and storage dumps.
Asked about taking on Zimbabwe risk, Diedrechsen said there had been significant changes in the country’s business environment under the post-Mugabe administration.
“We already found it significantly better than it was a year ago. As I said, we’ve been busy for two years, from the old regime into the new one. I’m personally very excited for what I believe will happen post the elections and what’s already happening, to be fair,” he said.
“I hear a lot of the doomsayers and people that are negative because of what people have experienced for so long. I think it’s an exciting time and it’s a change that’s going to do, not just Zimbabwe great, I think the whole region.”