CREDIT GUARANTEE SCHEME

InfraFIN is part of a credit guarantee system that provides a tailored service solution to Engineering, Procurement, and Construction Projects (EPCs) to help them complete infrastructure projects on time while also promoting economic development and sustainability. Credit guarantee systems offer financial solutions to the specific challenges construction SMEs face in obtaining financial security for their projects. Moreover, the credit guarantee system, in combination with engineering supervision, is intended to eliminate both EPC and SME risk exposure.

Niche expertise, especially a comprehensive awareness of the issues faced by construction enterprises, enables:

1. For tailored guarantee solutions,
2. Proven experience in construction supervision,
3. Reliable construction ancillary insurance.

The scheme goes beyond providing guarantees, the company builds strategic partnerships with its clients, ensuring their success through:

1. Flexible options,
2. Competitive rates,
3. Unwavering support throughout the application process.

The credit guarantee program makes use of FSCA-registered insurance companies that have reinsurance support and are committed to developing emerging contractors and enhancing the sector’s value chains through partnerships with engineering consulting firms within the construction service ecosystem.

Challenges Faced by Contractors

Research indicates that contractors struggle to source guarantees from reputable insurance companies with credible credit ratings.

This often leads them to seek guarantees from credit providers registered with the National Credit Regulator (NCR), which are not registered with the Financial Sector Conduct Authority (FSCA).

This poses a high risk to EPCs because these NCR companies may not honor claims due to the lack of reinsurance or financial backing, thus:

1. EPC is exposed to risk,
2. The emerging contractor is exposed to risk,
3. The project is exposed to risk.

Consequently, the credit guarantee scheme goes beyond providing guarantees; it also provides supervision to the contractor, including contract management, compliance management, construction management, and engineering design support, all of which benefit the EPC, the project, and the emerging contractor.

Impact on EPCs

This financial stability constraint imposed by the contractor weakens EPC’s primary sustainability mission and ability to empower and develop SMMEs into significant infrastructure contractors. The failure to obtain reliable assurances impedes infrastructure projects, hinders contractor expansion, and slows economic growth.

Description of the Process

1. EPC awards the project to the client and instructs the client to contact InfraFIN for the guarantee.;
2. InfraFIN contacts the insurance company (Guarantor) to assess the application and provide the quote.;
3. GUARANTOR presents the quote to the EPC and the client;
4. When in agreement, the client accepts the terms, InfraFIN facilitates with Guarantor;
5. Guarantee issued to the EPC project management team and monitored for the duration of the contract;
6. InfraFIN provides the engineering supervision to the contractor to red flag any possible risk.

As a result of the process outline, the risks for the project, the investor, the guaranteeor, and, most importantly, the contractor will be reduced, which will promote the expansion of the construction industry.