Rwanda water PPP project helps flow of Gulf infrastructure
A $75 million commitment to the government of Rwanda for clean water production through a public-private partnership (PPP) is the largest in terms of capacity and value in sub-Saharan Africa (SSA), outside of South Africa. Despite this being a drop in the ocean given the region's investment needs, it underscores growing Gulf appetite for SSA investment.
Metito – a Dubai-based water treatment specialist company – on Tuesday signed a concession agreement for a PPP worth $75 million with the government of Rwanda to develop a new, sustainable bulk water supply plant in Kigali.
The deal marks the first water concession contract of such scale awarded by the government of Rwanda, and the largest in terms of capacity and value in SSA, outside of South Africa. It will also be Metito’s first investment into SSA.
Rami Ghandour, Metito
“While the concession has been agreed on, we are yet to reach financial close,” says Rami Ghandour, managing director of Metito speaking from Kigali. "We aim to achieve this within the next three to six months. Once that has been agreed, we can get the project off the ground and clean water will be available within two years of starting the project.”
Metito has mandated the Emerging Africa Infrastructure Fund as the lead debt arranger on the deal.
The deal will be a boost to the government of Rwanda, and the region more generally, as it looks to fund a huge infrastructure deficit through PPPs.
Traditionally focused on Mauritius and South Africa, PPP projects are becoming popular in the broader region, with deals done in Nigeria, Ghana, Tanzania and Kenya. Many of these countries have drafted PPP-related legislation into law to make the process easier for interested parties.
“But PPPs do need to be structured well. The creation and implementation of PPP-related law is something we are beginning to see more frequently in sub-Saharan Africa. This will go a long way to ensure that projects are fulfilled to the highest standards, on time and within budget.”
Metito's Ghandour adds: “Access to a clean water supply in sub-Saharan Africa is low. And as it stands, there are some governments in the region that don’t have enough cash to fund such large projects. PPPs are a good way to bridge the gap.”
Middle Eastern drive
According to a survey by the Dubai Chamber of Commerce and Industry, in collaboration with the Economist Intelligence Centre, released in September, Gulf development agencies and corporates have provided around $30 billion of funding to African infrastructure projects during the past decade, amounting to around 7% and 10% of total inflows, but typically the focus is on northern Africa and South Africa.
North Africa has received the bulk of aid, around 65% of the total amount distributed to the continent as a whole, and 60% of the share in direct private investment. However, exceptions to the rule are growing, as Middle Eastern and Gulf countries are beginning to tap into SSA’s growth story, highlighted by Metito’s investment in Rwanda.
“Metito’s deal with the Rwandan government is the company’s first PPP investment into sub-Saharan Africa, but it will by no means be the last,” says Ghandour.
“We have already been approached by officials from Rwanda’s neighbouring countries to do something similar, which we are very interested in pursuing.”