Standard Bank Group (SBG) has advanced the City of Tshwane a R1-billion loan to fund the city's capital expansion projects for the 2010/11 financial year. This loan is in line with Standard Bank Group's support for public sector investment in infrastructure.
City of Tshwane is a municipality in the north of South Africa's Gauteng province.
The 15-year loan is earmarked for a number of infrastructure projects aimed at improving the delivery of services to the city's residents.
Thuli Kumalo, Director for Government, Institutions and BEE Finance at Standard Bank Group in South Africa, says the group anticipates being involved in similar funding deals in coming months as more metros and provincial governments go to market to raise debt to fund infrastructure for enhanced service delivery.
"We are seeing an increased requirement for debt from various levels of government, including metros and provinces as they race to meet the 2014 deadline of the Millennium Development Goals to improve access to basic services. We expect the need for debt funding from local government to finance infrastructure spending to rise significantly in the next few years as they deal with pressure to improve service delivery," says Ms Kumalo.
She says the Tshwane loan is tangible evidence of Standard Bank Group's commitment to partnering and deepening its relationships in the public sector and its ability to raise significant funding off its own balance sheet. She says the loan further gives Standard Bank Group a strong platform to grow its share of the market for banking services to alllevels of the government.
"We are excited to be able lend the City of Tshwane an amount of this size as this comes at a time when Standard Bank is taking more deliberate steps to establish long-term partnerships with government. We understand the huge developmental challenges that South Africa faces and the mandate that all levels of government have to meet those challenges. This funding will contribute to addressing those challenges," says Ms Kumalo.
"Tshwane is an important platform for us to offer similar long-term loans to other municipalities. We are committed to work in partnership with the public sector and are open to do more business with all levels of the government on commercial terms suitable to all parties.
"Standard Bank has a number of people with appropriate expertise and who understand the public sector environment very well. We have the balance sheet and technical capacity to meet the funding needs of the size required by local government," she says.
Ms Kumalo says the City of Tshwane chose Standard Bank Group on many fronts largely because of its wide footprint, better product offering and solid relationship management.
"As far as the tender evaluation is concerned, we believe that over and above meeting the necessary requirements of the tender, we offered the best value for money and demonstrated the best understanding of the City's business.
"With the level of expertise in our business, we understand the needs and challenges of this sector and therefore are able to respond accordingly and to provide innovative solutions," she says.
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