Before the pandemic changed our lives our transport strategy had begun to explore the immense potential that rail has to open up investment and trade on the African continent. We are now looking to increase exposure to rail in its broadest sense via Traxtion. Traxtion controls one of the largest, privately owned mainline locomotive fleets in Africa, working across full service rail freight operations, rail network operations, locomotive operations and leasing.
The other key opportunity we see coming out of the pandemic era is in the power generation space. We see African economies become increasingly connected to one another, increasing the power requirement even further. The challenge for us and our partners is to look ahead at a disrupted power market and ensure that the end user experiences better, more reliable delivery.
I do not believe we have yet seen the full impact the pandemic will have on the public-private partnerships that are a key feature of the infrastructure investment space we operate in. We expect severe disruptions and challenges to be seen across revenue generation — from both user fees and availability payments, day-to-day operations and management of projects due to staffing issues, risk assurance and bankability for future projects.
At the level we are operating at, partnerships are, and always will be, critical, and it is clear to us that the failure of public private partnership projects in the Covid-19 era is not an option. Infrastructure investment will need solid policy responses from governments, who will need to continue to proactively engage with private sector partners, and recovery plans for PPP projects must be harmonised with national strategic priorities.
The scope of impacts and recovery plans must have short, medium and long-term strategies that mitigate the risks of today, next month, and the coming months. These recovery plans must also focus on a win-win output inclusive of the needs of both the public and private sectors.
The World Bank has suggested that governments create blanket financial guarantees for lenders to finance critical infrastructure projects, supported by clear parameters for what qualifies by sector, project size, and type of financing. This would help calm lenders’ nerves while the details of direct support to project owners are worked out.
We can only applaud initiatives such as the African Development Bank’s rapid response facility to provide fast, flexible and effective responses to lessen the effect of Covid-19 on its member countries, including those in the private sector.
It is in times of great change and crisis that the principle of open and frequent communication with staff, investors, partners and stakeholders becomes key to how businesses operate. What this crisis, and many others, have taught us is the value of structuring yourself, and your investments, in a manner that allows you to survive lows and highs.
This resilience and ability to adapt will need to become hard-wired into our lives if we are to succeed in an environment that never ceases to offer new challenges.
• Mahloele is CEO of pan-African fund manager Harith General Partners and chairs Arena Holdings, which owns Business Day.