Credinvest enters Botswana
Malta's foremost corporate finance and consulting organisation, Credinvest International, has set up office in Botswana that will be responsible for the company’s entire Africa projects. Lawrence Larson, Credinvest’s Head of Corporate Affairs Africa, who also doubles as Country Director in Botswana, believes that investment banking in Botswana is still at its infancy and that Credinvest is here to redefine its landscape. The company is already involved in multi-million pula projects in partnership with the private and public sectors. He spoke with KEABETSWE NEWEL
Q: What would you like the people of Botswana to know about Credinvest right away?
A: Credinvest International Corporate Finance Limited (CICF or Credinvest) is a corporate finance firm incorporated and licensed as an authorised financial services firm under licence number C21795 and headquartered in Malta, Europe.
Alain Mangion founded the company in 1997 and it has carved a niche for itself as a reputable one-stop shop to serve clients seeking both financing and Engineering Procurement and Construction (EPC) expertise for the design-finance-development-transfer of large infrastructure projects in emerging markets, primarily in healthcare, housing, rail, roads, and energy.
Mangion has also held directorships in various companies, signifying that clients wish to add his expertise to their boards. Most recently, Mangion, having been extended an invitation, joined the investment board of the Italian Innovation Fund that is seeking to invest in young technology companies.
Q: What is the firm's value proposition?
A: The firm provides its clients with expertise in financing and structuring transactions with the selection and partnership with high-quality Engineering Procurement Construction firms (EPCs) in Europe and the United States.
Q: Why was Botswana selected as an investment destination?
A: Our firm is proud to announce that the Botswana credit rating, which is currently the strongest in Africa, is a key attraction to international funders and is also the reason that the coupon on the investments is very low as it reflects the confidence our firm has in the ability of the country and its citizens to repay both sovereign and individual debt obligations.
In summary, negative interest rates in the Eurozone, together with the investment grade of the Republic of Botswana, means that our Grade A banks in Europe can achieve yield pick-up, which positions Batswana to benefit from high-quality and affordable housing developments, resulting in a win-win outcome for both the Government of Botswana, its employees and its financiers/lenders.
Q: Please expound on establishment of the Botswana operation.
A: In 2020, the firm established a subsidiary in Botswana, Credinvest International Botswana, to serve the domestic market here after we concluded that Africa could not be best served from a satellite office in Europe. And for our initial projects in Botswana, the firm has committed Euro 350 million (approximately P4.5 billion) towards infrastructural development.
These contracts are confidential and cannot be discussed publicly, save to state that the initiatives will solve critical housing shortages in Gaborone by offering affordable, first-rate housing for a vast segment of the citizens of Botswana who to-date have been unable to secure affordable mortgage rates and commensurate build quality for the prices we can attain as a result of the scale of the developments, as well as the low coupons in Europe, which will be transferred to our clients.
Q: How does your recently announced housing scheme work?
A: The scheme is effectively a rent-to-own arrangement. This means that Credinvest International will design, finance, and develop fully furnished apartments and standalone townhouses, including interest. This is for over a maximum period of 13 years with development costs and financing ranging from P4950 for a two-bedroom apartment to P6850 for a three-bedroom standalone townhouse on 400 square metres of land and prices of P772,200 to a maximum of P1,388,400 respectively.
To qualify for the scheme, one must be a member of an approved union with a deduction code under the Trade Unions and Employers' Organisation Act. In order to broaden the eligibility for more employees, their respective unions will need to have a signed construction contract with Credinvest. To-date we have signed a contract with the Botswana Public Employees Union (BOPEU) and we continue to engage with other unions for this invaluable facility that will provide high-quality homes for many government employees and their families.
Q: Will a deposit or interest need to be paid during the construction period?
A: A qualifying member does not pay a deposit up-front nor will they need to pay any installment during the construction period. The contract stipulates that the client will pay the first instalment only upon completion of the house and once the occupation certificate has been issued. Should the build quality not meet the agreed specifications in the contract, the union can cancel the contract. Furthermore, should the construction not commence within six months of execution or signing of the agreement, the union can cancel the agreement. It is important to note that the union needs to agree to a minimum number of housing units that they desire to have constructed for their members.
Q: How do Credinvest's prices compare with prevailing market prices?
A: Good question. Our scheme is the most competitive in the market from a price and value perspective. These initiatives are of the highest European build quality whilst being competitively priced by regional and international standards. We emphasise value because we do not compromise quality over price.
Q: What is the projected economic and social impact of the housing project?
A: While the core focus of this development is to provide a quality home for many government employees who have to-date been unable to qualify for a house via traditional mortgages in Botswana, the employee housing project will create 20,000 construction jobs in the region at its peak, with 2,000 permanent jobs post-completion, thereby adding to the gross domestic product of the country.
The entire 500 hectares is a planned city within a city – offering a live, work and play environment with food and retail shopping and arts and culture which will create lasting employment opportunities for many Batswana, especially those in the performing arts. And these facilities will be accessible to both residents and non-residents.
Q: How are the finances for the project being sourced?
A: All of our funds are from reputable international banks, primarily in Europe, and we adhere to all internationally required Anti-Money Laundering (AML) and Know-Your-Client (KYC) requirements. The Government of Malta is available to assist with direct confirmation of the source of capital with our European banks that will distribute funds for all projects in Botswana, as well as for any due diligence that may be required on our firm and our lenders. It is important to note that no projects will be undertaken unless a contract is signed. Therefore, deposits will only be approved for remittance to Botswana upon provision of signed contracts that show the use of funds, among others, and will also be used for KYC and AML purposes.
The contracts are comprehensive and are intended to protect all parties from any potential money laundering, including funding of terrorist activities. Furthermore, we have expressed support from the Government of Malta to the Government of the Republic of Botswana for the projects we are funding here, which are all developmental, with the possibility of financing reconstruction projects such as road and rail rehabilitation, should this be required.
Q: Do you have other projects in Botswana?
A: Yes we do. We hope to announce a substantial Private Public Partnership (PPP) valued at EUR105 million (around P1.3 billion) in the near future.
Q: Is there anything you can share about your Corporate Social Responsibility programme?
A: We are proud to announce our appointment of the country’s foremost athlete, Nijel Amos, as the firm’s brand ambassador. We actively support Nijel in his goal of bringing home the gold at the Tokyo Olympics in July this year and have proudly agreed to sponsor him for two years. We believe Nijel serves as an inspiration to Botswana’s youth that there is still no substitute for hard work. We will carry on this tradition with many other deserving Batswana as testimony to our commitment to encouraging excellence.