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DBSA injects billions into infrastructure projects
DEVELOPMENT BANK OF SOUTHERN AFRICA LIMITED
Date: 18 September 2013
DBSA INJECTS BILLIONS INTO INFRASTRUCTURE PROJECTS
Since 2009, the DBSA has disbursed R43.1 billion to infrastructure projects,
advanced R1.5 billion in grant funding to support project and capacity developments,
whilst reinvesting R880 million in reserves. Recognising that the DBSA needed to
better align itself to shareholder expectations, respond to the growing funding needs
in national network infrastructure and adapt to changes in the operating environment,
the Bank extensively reviewed its operations during the year to adopt a more
focussed approach to infrastructure development, remain operationally efficient,
effective and financially sustainable. The Bank is now in a better position to
accelerate infrastructure delivery.
In releasing the Bank’s first Integrated Annual Financial Results for the year ending
31 March 2013, the Development Bank of Southern Africa (DBSA) announced that it
has disbursed R9.2 billion to support key strategic infrastructure projects in South
Africa and the SADC region, of which 81% related to projects in South Africa and
19% in the rest of SADC. It is estimated that at least 22 100 direct job opportunities
will be created in South Africa from these infrastructure funding investments.
Through the provision of infrastructure financing, the DBSA seeks to support the
development of projects critical to the country’s development agenda and activities
are directed to support, amongst other, the financing of energy generation, water and
road infrastructures, as well as municipal infrastructure critical to the delivery of
electricity, water, sanitation and refuse to households.
Investment support to the municipal market remains an important focus area for the
DBSA as infrastructure backlogs continue to hamper service delivery in many
municipalities. Approvals for the year to metro’s amounted to R2.3 billion, whilst
support to secondary and under-resourced municipalities totalled R937 million. Total
disbursements to municipalities were 36.5% higher than in 2011/12, with R1.2 billion
disbursed during the year. Within under-resourced municipalities, the Bank doubled
its disbursements to R127 million. During the year the Bank also provided selected
non-financing services to municipalities and supported eight municipalities with
turnaround strategies and facilitated the completion of 24 projects as part of the
Bank’s operations and maintenance programme. As part of the Bank’s growth path,
the organisation will also seek to expand its pre-and post-financing support to
secondary and under-resourced municipalities.
During the year, the Bank continued to support the government’s energy generation
programme with over R5.6 billion disbursed on power projects, including the
Department of Energy’s Renewable Energy Independent Power Producers (IPP)
Procurement Programme. Of these amounts, R937 million was committed and R172
million disbursed in favour of BBBEE enterprises. Through this programme the
Department seeks to procure at least 3 825 MW from independent power producers.
Other key infrastructure funding highlights for the year included:
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* The DBSA supports the development of water and sanitation infrastructure by
providing financing in the main to municipalities, the regional water boards and
bulk schemes that are undertaken by Trans-Caledon Tunnel Authority (TCTA).
Over the year, a total of R1.4 billion was advanced toward water infrastructure
projects in South Africa.
* Through its R3.0 billion investment in the Housing Impact Fund, as well as the
R300 million in International Housing Solutions (IHS), the DBSA has contributed
substantially to the creation of new housing units in the segment of affordable
housing. In aggregate R248 million was drawn and invested during the past year.
* The needs for improved student accommodation at various tertiary institutions
are well documented. The DBSA provided funding to the value of R50.2 million
over the past year through a combination of direct lending to tertiary institutions
as well as indirectly by financing private sector developers of student
accommodation. This area of support is envisaged to grow substantially into the
future as the DBSA seeks to respond meaningfully to this national challenge.
* Low levels of economic integration amongst the countries in the region continue
to impact many countries on the continent, The Bank continued to provide strong
development finance support outside South Africa for the period under review
with approvals of R5.6 billion (US$603 million), compared to the R3.8 billion
achieved during 2011/12. Significant inroads were made into the strategic energy
and transport sectors in Angola, Mozambique and Zambia. A total of R2.9 billion
(US$344.6 million) was approved for projects in these countries. Disbursements
for the year amounted to R1.6 billion (US$441 million).
During the year the Bank also provided non-financing support to a range of strategic
programmes. Key highlights for the year included:
* Green Fund
In April 2012, the DBSA concluded a Memorandum of Agreement with the
Department of Environmental Affairs to establish and manage the R800 million
Green Fund. The Fund aims to provide finance for high-quality, high-impact, job-
creating green economy projects around the country.
In its first year of operation, the Fund received a total of 590 applications to the
value of R10.9 billion from organisations across the country, including non-profit
entities, the private sector and government departments.
To date, the Fund approved projects to the value of R330 million.
* Vulindlela Academy
The DBSA, through the Vulindlela Academy offers accredited capacity building
and training to development intermediaries in Southern Africa, including
municipalities, government departments, parastatals, public utilities, non-
governmental organisations and development finance institutions.
For the period under review, the Vulindlela Academy trained 6 385 municipal
officials (6 003), councillors (92) and delegates from DBSA intermediaries and
development finance institutions (290) in the priority skills areas of planning,
finance, management and leadership.
Approximately 3 195 leaners were certified ‘competent’ in their areas of learning
through the Academy.
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* Accelerated School Infrastructure Development Programme
The DBSA facilitated the implementation of the Accelerated School Infrastructure
Development Programme (ASIDI) to eradicate unhealthy and unsafe school
structures in the Eastern Cape. To date, the Bank has completed the construction
of 17 of 49 schools and the remaining 32 schools will be completed during the
2013/14 financial year.
It is estimated that a total of 12 420 learners will benefit from this programme
once all the schools are completed. The Bank, as a trusted implementing agent
and a catalyst for infrastructure development has once again been requested to
assist the Department of Basic Education in the construction of a further 70 new
schools in the next two years.
Speaking prior to the release of the 2012/13 annual results, the Chief Executive of
the DBSA, Mr Patrick Dlamini said: “We are confident that the implementation of the
Bank’s growth strategy, will enable us to improve the scale of development impact
and contribute in bridging the infrastructure gap to enhance the prosperity and well-
being of people in South Africa and on the continent”.
“We are releasing this year’s annual results at the backdrop of a challenging
operating environment, especially in the metro and state-owned enterprises markets,
as well as the impact of the downturn of the economy” said Dlamini.
The Bank’s financial position remains sound, with a growth of 2.7% in total assets
from R52.3 billion to R53.9 billion for the year under review. The underlying financial
performance of the Bank was mixed, with operating income, before adjustments for
foreign exchange and revaluation on financial instruments, reaching R1.94 billion, in
line with the R1.95 billion recorded in the previous financial year. Out of surpluses
generated, grant funding of R154.6 million in the form of technical assistance grants
and a grant to the DBSA Development Fund was advanced during the year.
As indicated at the launch of the Bank’s interim results during November 2012, the
overall performance for the period under review was negatively impacted by
impairment losses on development loans of R1.6 billion and revaluation losses on
financial instruments of R403 million, resulting in a net loss of R826 million for the
year. These recent impairments are largely concentrated in the non-public sector
investments book in South Africa, which is more susceptible to changes in the
economic conditions. It should be recognised that development finance takes a
longer-term view on investments and may be prone to fluctuation during the credit
life cycle. Going forward, the DBSA’s focus will predominately be directed towards
the financing of public sector infrastructure projects in the water, sanitation, energy,
transportation and ICT sectors, which are less susceptible to changes in economic
conditions. Projects in the social services of health and education will also be
targeted, but to a lesser extent.
Growth in operating expenses of 2.3%, excluding restructuring expenses, was
maintained below inflation.
Cash flow from operating activities remained strong, with a notable increase of
25.1% from R805.1 million to R1.0 billion. For the year under review the Bank
maintained a debt-to-equity ratio of 217.4% well within the statutory limit of 250%.
“Despite the current losses, the Board and Management recognises that there are
enormous challenges and opportunities within the current infrastructure development
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environment and will continue to build the organisation to maximise its development
impact on a sustainable basis through the long-term investment cycle” said Dlamini.
Issued by the Development Bank of Southern Africa
For More Information Contact
Name: Jacky Mashapu
Cell-phone: 071 670 3768
"About Development Bank of Southern Africa”
The Development Bank is a leading Development Finance Institution (DFI) in
Africa, playing the roles of Financier, Advisor, Partner, Implementer and
Integrator. The Bank maximises its contribution to sustainable development in
the region by mobilising financial, knowledge and human resources to support
Government and other development role-players in improving the quality of life of
people in the region through funding infrastructure projects; accelerating the
sustainable reduction of poverty and inequity; and promoting broad-based
economic growth and regional economic integration.”
end
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