- Region: Africa
- Untied Loans
July 10th, 2008
- Japan Bank for International Cooperation (JBIC; Governor: Koji Tanami) signed on July 9th an Untied Loan totaling up to 7.5 billion yen with Eskom Holdings Limited (ESKOM) in the Republic of South Africa. The loan is co-financing by The Bank of Tokyo-Mitsubishi UFJ (lead arranger), Sumitomo Mitsui Banking Corporation, Mizuho Corporate Bank, The Ibaraki Bank, Higashi-Nippon Bank, and The Hiroshima Bank with JBIC providing a guarantee for their co-financing portion.
- The loan will finance the projects undertaken by ESKOM, for its Northern Grid Transmission Projects which aim to strengthen the existing transmission network and further expanding it. The projects will ensure that the growth within the Limpopo province is sustained.
- Japanese automobile companies and other manufacturers have been paying growing attention to South Africa in recent years, as an export hub for Africa, Europe and the Middle East. The country also exports large volumes of rare metals to Japan, such as platinum, nickel and chrome ore. In addition, a number of Japanese companies are engaging in resource development in South Africa. The planned projects will ensure that there is sufficient electricity supply to the Limpopo province that will support the mining and rural development projects. Thus the development of power infrastructure is an urgent issue not only for South African companies but also for the locally operating Japanese companies.
- The South African government launched the Accelerated and Shared Growth Initiative for South Africa (ASGISA) in February 2006. ASGISA objectives encompass creating jobs, alleviating poverty, improving service delivery and promoting good governance. ESKOM supports ASGISA by creating jobs, growing its asset base, training new learners and exploring opportunities to increase local content. ESKOM is pushing ahead a large-scale power generation and transmission/distribution infrastructure development program to meet ever-increasing power demand. Considering the importance of South Africa to Japan, JBIC signed the Declaration of Intent (DOI) on Comprehensive Strategic Partnership with its government in December 2006 to support the ASGISA*1. Based on ASGISA, JBIC signed the Untied Loan to finance the transmission projects in June 2007*2. This loan follows on from the existing loan. Also this loan is part of JBIC's efforts to cooperate with the South African government in addressing the country's important policy agenda based on this strategy. The loan is also expected to strengthen the relationship between South Africa and Japan.
- In the TICAD IV, the Government of Japan announced JBIC's specific financial support for Africa. The total financial support will amount to US$2.5 billion over the next five years. JBIC will remain committed to further improvement of the business environment in South Africa.