By Landing Ceesay
The Minister of Finance and Economic Affairs, Hon. Seedy Keita, has dispelled claims that the government of the Gambia is mortgaging, selling, or privatizing the Senegambia Bridge to Africa50.
The Finance Minister clarified at a press conference on Saturday that asset recycling is not the same as privatization. Privatization involves the government selling its shares or ownership rights and title to an entity or party outside the government.
“It is not a sale. Because in a sale transaction, the number one criterion is that the title will change. There will be a consideration that you will receive as a seller and the buyer will get title. And it is not a mortgage. Because the one important difference between a mortgage and a securitization is, in a mortgage, at the end of the mortgage life the asset is yours as the buyer, and as the one who benefits from the public transaction.
“As the institution who is going into that will technically sell and then will hold on to the title. But the title will be in the name of the tenant or the landowner, and the title will be asked at the end of the mortgage term. So the very important distinction is, we are not doing anything like that. This is a nationally strategic and significant asset and in no way, the government will take a process to sell a strategic asset like this. We are not privatizing it, we are not mortgaging it, and we are not selling it,” the Finance Minister stated at a Press Conference. The Finance Minister further clarified that asset recycling is a financial instrument, terminology, or arrangement that involves government-owned assets with predictable and reliable cash flows. Hon. Keita said that the Senegambia Bridge was built by the African Development Bank (ADB), and that the Gambia government is now working with Africa50, which is an entity of the ADB. He emphasized that the Gambia government is not dealing with a private company, but rather with a development partner, just like it has done with the European Investment Bank, the World Bank, the IDP, and other development partners.
“Africa50 is owned by 31 shareholders, the largest shareholder, is the African Development Bank (ADB). The chairman of the Board of Directors of Africa50 is the President of ADB. Then the other 30 shareholders, are African countries, of which the Gambia is a member. So we are going to an institution which is an international institution, that is a development partner and that is why we have chosen them. Because they are the infrastructure arm of the African Development Bank (ADB).
“I will also emphasize that the transaction we are embarking on is not a sale transaction, is not a mortgage transaction and it is not a privatization transaction. It is simply a monetization of the rights. Because an asset has two characteristics. You have outright ownership, and then you have the rights according to that ownership. So we are separating that, and we are only selling forward the rights to the cash flows. Which will be sold in the form of tolls emanating from the bridge,” he said. Hon. Keita, the Finance Minister, clarified that the government is not using asset recycling to privatize the Senegambia Bridge. Instead, they have entered into a joint development agreement with Africa50.
“We are shareholders with Africa 50 in a special purpose vehicle which will have the rights to those cash flows and the arrangement is that Africa50 will be the key financier bringing money to the table of the proceeds which is 100 million dollars. We will get 87% shareholding in the special purpose vehicle and as the government of the Gambia, which is going to be represented on the board. In the governance structure, the government of the Gambia will get 12.5% shares. Those shares are not paid for, those shares are entitled to us,” Hon. Keita said.
Hon. Keita said in normal circumstances they have to pay for the portion of their shares in the transaction, but these are bonus shares the Gambia government has in the transaction.
The Finance Minister said the second agreement the Gambia government signed with Africa50 is like an MOU with terms and conditions.
“The second agreement we have signed is like an MOU, an MOU in the sense that we are saying when we go to conceiving the concession proper. These are the broad outlines that the concession agreement will cover. The concession agreement will cover operation and maintenance, environmental, social, and governance issues, fiduciary issues, and the welfare of the infrastructure.
“Because the existing toll will totally revamp as it happened. There will be a better toll system that will be developed to ensure that there is transparency in revenue collection and reporting. The government is at the centre and the people will not in any way not be aware of what is going on at the Bridge. Because we will be on the board but the management and operation will be delegated to Africa 50 as a private sector entity that is specialized in this kind of operations,” he said.
Last week, the Gambian Minister of Finance and Economic Affairs announced on CNBC Africa that the government had signed a $100 million agreement with Africa50, an infrastructure investment platform founded by the African Development Bank (AfDB) and African states. The agreement is to manage and operate the Senegambia Bridge, a major crossing point that connects the South and North banks of the Gambia River.