By Yusef Taylor, @FlexDan_YT
The Minister of Finance and the Minister of Works held a press conference on Saturday 15th July 2023 to respond to public concerns over the “monetization” of the SeneGambia Bridge after signing a memorandum of understanding to receive $100 Million USD from Africa50. After the news made the local news cycle, citizens petitioned the National Assembly raising concerns that the bridge which is also known as the TransGambia Bridge was being mortgaged and compared the agreement to a loan agreement prompting calls for Parliamentary approval.
The Minister of Finance Hon Seedy Keita was eager to dispel some of those concerns claiming that Parliamentary approval is not required for a concession contract, citing numerous concession contracts he signed since becoming Minister of Finance. He explained that given that the concession agreement to “monetize” the bridge is not a loan and that section 155 of The Gambian Constitution did not apply to the agreement. However, it’s been brought to our attention that section 79(1)(c) dictates that “the President shall be responsible for the negotiation and, SUBJECT TO RATIFICATION BY THE NATIONAL ASSEMBLY, the conclusion of treaties and OTHER INTERNATIONAL AGREEMENTS”.
Africa50 is an international organisation which was established by African Governments and the African Development Bank. According to its website, it currently has 33 shareholders, comprised of 30 African countries, the African Development Bank, the Central Bank of West African States (BCEAO), and Bank Al-Maghrib.
SeneGambia Bridge Revenue Collection
One of the most pertinent questions raised focuses on toll revenues collected from the SeneGambia Bridge. This question was not answered entirely however, the Minister of Works and the Minister of Finance both gave some monthly estimates on revenues collected since they were appointed back in 2022.
According to the Minister of Works, Hon Ebrima Sillah, the government has been “struggling at the SeneGambia Bridge”. After he was appointed together with the Minister of Finance they embarked on a national tour of National Infrastructure where they learned that revenue collected “was between D14 and D18 Million Dalasis” per month.
According to Minister Sillah, they “immediately instructed that the automation systems be put in place, the CCTV should be operational and the barriers should also be installed. That month we collected about D45 Million. Since then, it has always been between D30 and D40”.
What’s in it for The Gambia?
According to Finance Minister, Hon Keita, The Gambia stands to benefit from “three streams of cashflow” which are namely;
- “Upfront cash $100 Million”,
- “The dividend as a shareholder [12.5%]” and
- “Taxation arising from their operations”.
How to Pay Back $100 Million?
Responding to public concerns during the press conference Finance Minister, Keita explained the repayments will be made from “the cash flows that will be collected as toll revenues will be used primarily to settle those financial obligations”. In addition to that “any residual profit will go as a dividend distribution which will be shared between the government of the Gambia and Africa50”.
So primarily The Gambia Government is “selling the rights to the cash flows which is in the form of tolls emanating from the bridge”, said Hon Keita.
One important aspect to note is that the operations of the SeneGambia Bridge will be managed by a Joint Venture between The Gambia and Africa50. Minister Keita noted that the joint venture will split shares of the SeneGambia Bridge as follows;
- The Gambia receives 12.5% shares, and
- Africa50 receives 87.5% shares.
Minister of Works, Hon Sillah clarified that the 25-year linear period is the maximum number of years that the project will take however, there is a 15% Rate of Return on Investment (RRI) which if met before the 25-year period will conclude the agreement.
So Why Africa50 Now?
Some public concerns focused on the timing of the investment deal with some noting that this deal will tie The Gambia Government’s hands over the bridge for 25 years which may outlive the current leadership of President Adama Barrow. However, the Minister of Works, Hon Sillah revealed their motivation for partnering with Africa50 in what he referred to as an “innovate” fundraising model.
According to Hon Sillah, after they increased toll revenues from around D18 Million per month to around D45 Million per month the government looked “into the specifics as to what we needed to do to ensure efficient management and also collection at the bridge. We realised that some of these things are not the core competence of the government”.
It was at that point that discussions to bring in Africa50 came about to assist them address some of the capacity gaps they observed.
Minister Keita explained some of the “heads of terms” of the MoU which form the basis of the agreement. “The concession agreement will cover the cost of maintenance, environmental social and governance issues, fiduciary issues and the welfare of the infrastructure”. In addition to this “the existing toll as we have it will be totally redone. There will be a better toll system that will be developed in order to ensure that there will be transparency of revenue collection and reporting”.
Back of the Envelope Calculation
A back-of-the-envelope calculation is an informal mathematical computation, often performed on a scrap of paper, such as an envelope. A back-of-the-envelope calculation uses estimated or rounded numbers to develop a ballpark figure quickly.
According to our back-of-the-envelope calculation, the SeneGambia bridge currently generates D35 Million per month which translates to D420 million per year and D10.5 Billion over 25 years.
In comparison, the $100 Million investment deal translates to D6 Billion over 25 years. This equates to D240 million per year and D20 million per month over 25 years.
The difference between the two of D180 million per year represents the amount which The Gambia stands to lose without factoring in the operational costs of management and maintenance.
Given that the operational costs of management and maintenance are not known these have not been included in the calculation, however, it’s important to note that whatever profit is generated in toll revenues will need to go towards maintenance and management.
The Gambia also stands to gain dividends of 12.5% after paying the monthly amount due to Africa50 while Africa50 will gain 87.5% in dividends in addition to taxes paid by the Joint Venture entity.
The Memorandum of Understanding is currently not a binding agreement according to the Minister of Finance; however, it forms the basis of negotiations for the final agreement. If the Government intends to comply with section 79 of the 1997 Constitution the agreement can still be tabled at the National Assembly for Parliamentary approval if deemed necessary.
It’s important to note that the SeneGambia bridge was jointly funded by a $67.36 Million USD grant and soft loan from the African Development Bank. The financing agreement by the AfDB is split as follow;
- The Gambia was awarded a $63.55 Million Grant from AfDB,
- Additionally, The Gambia was to provide a counterpart fund of $0.16 Million,
- In total, The Gambia was to provide a total of $63.71 Million,
- Senegal was awarded a $3.18 Million Loan from AfDB,
- Additionally, Senegal was also to provide a counterpart fund of $0.47 Million,
- In total, Senegal was expected to provide a total of $3.65 Million.
Looking at the Financing Agreement for the construction of the Bridge, Senegal was expected to provide a loan for the construction of the SeneGambia Bridge, while the Gambia was given a grant. This leaves question marks over Senegal’s interest in the Africa50 $100 Million agreement.
During the Press Conference, it was revealed that various forms of payment methods will be employed at the tolls when the concession agreement commences which should translate to an increase in cashflows. In addition to this if traffic increases at the bridge the monthly toll revenues collected could increase. Meaning that even if the current toll revenues are collected the Gambia stands to lose if all operational costs don’t exceed D180 million a year.