development bank of southern africa · ―spatial fragmentation and low density settlement patterns...
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DEVELOPMENT BANK OF SOUTHERN AFRICA
CONTENTS
OVERVIEW OF THE DBSA
DBSA INTEGRATED VALUE PROPOSITION
PERFORMANCE OVERVIEW AND DEVELOPMENT IMPACT
OUTLOOK
PARTNERSHIPS
01
02
04
03
05
3
Overview of the DBSA
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Priority Sectors:
Vision:A prosperous and integrated resource‐efficient region, progressively free of poverty and dependency
2
Mission: To advance development impact in Africa by expanding access to development finance and effectively integrating and implementing sustainable development solutions
Geographic mandate:
Primary
Health
Education
DBSA’s primary market
DBSA’s main focus outside of SA
+ Rest of Africa
Energy
Transport
ICT
Water and sanitatio
Secondary →
→
DBSA Mandate
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DBSA’s Corporate Structure
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CEO
Coverage Project Preparation Financing/ Transacting
Infrastructure Delivery(IDD)
Treasury & Balance
ManagementChief Risk Officer
Financing Operations
Corporate Services
ChiefFinancial Officer
Chief Investment Officer
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DBSA Integrated value proposition
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Integrated Product Suite
Plan Prepare Plan Project
Preparation
1 2Financing
3Build
4 Maintain / improve
5
Project identification Feasibility
assessments Technical assistance Financial structuring Project Preparation
funds Lead arranger
Provide vanilla and boutique financing opportunities Debt Mezzanine
Finance Limited non–
recourse lending
Managing the design and construction of key projects in the education, health and housing sectors
Project Management support
National and provincial government departments
Municipalities
South Africa Municipalities SOE PPP Private sector
Rest of Africa SOE Public–Private
Partnerships Sovereigns
Supporting the maintenance and/or improvement of key infrastructure projects
National and provincial government departments
Municipalities
DBSA primary focus area
Ser
vice
s/pr
odu
cts
Ser
vice
s/pr
odu
cts
Cli
ents
Cli
ents
South Africa Municipalities SOE PPP Private sector
Rest of Africa SOE Public–Private
Partnerships Sovereigns
Municipal assessments
Infrastructure plans
Advisory role infrastructure planning
South Africa Under resourced
municipalities
End‐to‐end Integrated infrastructure suite, from pre‐feasibility through finance, to implementation
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PPFS
Infrastructure Investment
Programme for South Africa
Funding Partners: European Union, KfW, AFD & EIB.
Co‐funding of EU grants with loans from DFIs to support national and regional infrastructure
projects.
AFD – DBSA Project Preparation
and Feasibility Study Fund
Enabling the implementation of NEPAD projects
SADC Project Preparation Development
Fund
Funding Partners : European Union and the German Government, through KFW.
Project level preparation activities, e.g. technical assistance, feasibility studies, and capacity
training.
DBSA Project
PreparationFund
Provide early stage risk capital to prepare infrastructure projects until bankability
Project Preparation
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Tshwane Bus Rapid Transit Project
6
DBSA Infrastructure Investment
Sou
th A
fric
aA
fric
aIntegrated Mass Rapid Public Transport Network which includes rail, taxi and bus services
Ilanga CSP1 project
100 MW concentrated solar power (CSP) plant, with a capacity to store energy for 4.5 hours
eThekwini Metro‐Northern /Western
Aqueducts Programme
A bulk potable water pipeline to connect inland bulk supply system to water treatment works
Ravinala Airport‐Madagascar
Rehabilitation, upgrade, expansion, operation and maintenance of the airports
Ithezi‐Thezi –Zambia 120 MW Hydropower Generation project
Cenpower –Ghana 340MW Cobnied cycle gas/liquids power plant
Sector Description Project Name
6
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Energy
Includes upgrading of substations and electrification of households– total
households impacted: 182 727
Rehabilitation of roads
Total households impacted: 842
Sanitation
Includes reticulation, upgrading and construction of waste water
treatment works) –total households impacted: 15 533
Water
Includes reticulation and provision of bulk water) – total
households impacted: 22 814
Energy generation Gas: nil MW [2016:
225 MW] Coal: nil MW [2016:
65 MW] Renewable [solar IPP]: 20 MW Total project impact: 20
MW
Education
Student accommodation: 1 139 beds Total
project impact: 1 139 beds
ICT
• Fibre‐optic roll out: 564 km
• Total project impact: 564 km
Transport
• Bus Rapid transit: 210 buses
• Total project impact: 210 buses
Municipal (South Africa)
Non‐municipal (South Africa and SADC)
Development Outcomes- Infrastructure Financing
7
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Qualifying Bulk Infrastructure
11
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Infrastructure Delivery and Project Implementation Support
8
Programme Management ServicesProvision of management and specialist expertise to support planning, design, budgeting, execution and maintenance of infrastructure projects and programme
Packaging of low cost semi‐ private Primary HealthCare Facilities, Acute semi‐private hospitals facilitiesin underserved areas Packaging and funding Public Private Partnershipfor Public HospitalsMunicipalities – lending and implementation ofclinic building/refurbishment
Packaging low cost semi‐private schools inunderserved areas co‐funded by governmentthrough DBSA and the private sector
Expansion of preparation, lending and constructionand maintenance of student accommodationfacilities
Sanitation facility upgrades in rural schools Donor ‐ implementing agent for donor fundedschool infrastructure delivery
Implementation Agent ServicesManagement of the design, upgrades, refurbishment maintenance of social infrastructure projects
Health Infrastructure:
Education Infrastructure:
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GreenFund
Green Climate Fund
DBSA is accredited to GCF Support innovative and risk‐sharing projects that contribute towards low‐carbon
and climate‐resilient development
DBSA is accredited with GEF as National Project Agency (NPA), funded by UNFCCC (World Bank as trustee)
Implementation of climate change & biodiversity projects‐ contributing to global environmental priorities
International Development Finance Club
DBSA is a member of the IDFC, a network of 23 national, regional and international development banks, committed to promoting low‐carbon and climate resilient futures
DBSA manages the Green Fund on behalf of Department of Environmental Affairs Provide catalytic finance to facilitate investment in green initiatives
GlobalEnvironmental
Facility
Climate Mitigation
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DBSA performance overview and development impact
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DBSA In RENEWABLE ENERGY INDEPENDANT POWER PRODUCER PROCUREMENT (REIPPP)
A programme developed to channel private sector expertise and investment into grid-connected renewable energy in South Africa. There have been notable improvements in the economic development commitments, primarily benefiting rural communities
The Department of Energy (DoE), National
Treasury (NT) and the Development Bank
of Southern Africa (DBSA) established
the IPPPP Office
The IPPPP Office provides the following
services:
Professional advisory services;
Procurement management services;
Monitoring, evaluation and contract
management services
31
35
18
139
109
Foreign
53
Domestic
Private sector investment totaling R192.6
billion committed (total project costs) for
IPP development in BW1–4 of which
R53.2bn from foreign financiers
19 050 job years
R19.1 billion of projected revenues
accrued over the 20 year project
operational life toward Socio-economic
and enterprise development (SED)
initiatives
92 projects will generate 6 327 MW
1.2 mn households powered
EquityDebt
Debt Equity Share of total project cost, Rbn
DBSA funded over 16 projects in Rounds 1,2&3 to the value of R7Bn
31%5%64%
DFIs Life FundsComm. Lenders
Major debt providers in REIPPP Rounds 1,2,&3, %
30
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DEVELOPMENT IMPACT FROM FINANCING ACTIVITIES16
Impact of municipal funding* Impact of non-municipal funding for 2017 (South Africa)
Energy Generation‒ Renewable (solar IPP): total project impact of 100
MW Education‒ Student accommodation: total project impact of
1 800 bedsICT‒ Fibre-optical rollout: 1 500 km Transport‒ Bus Rapid Transit: total project impact of 210
buses
Impact of Rest of Africa (excluding RSA) funding for 2017Energy Generation‒ Energy: total project impact of 760 MW ‒ Electricity meters: total project impact of 50 000
meters Transport‒ Kilometres of rail: total project impact of 425
kilometres of rail
Estimated Number of household benefitted, ‘000
220
140
160
120
100
60
240
20
200
180
40
80
0
23
16
2017
183
Residential FacilitiesRoads
Sanitation
ElectricityTransportWater
111
224
*Estimated at time of 2016/17 commitments
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BENEFITING COMMUNITIES WITH NEW AND IMPROVED INFRASTRUCTURE
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Plan
ASIDI: Phase II • 12 schools completed.
>4 200 learners benefited from the completion of the schools
• 10 schools in various stages of construction
Additional work completed• 49 KZN storm damaged schools
refurbished during the year
• 25 schools completed phase 1 (fencing)
• Town library was completed in Ekurhuleni Metro Municipality
Eastern Cape Housing Programme• 198 houses were brought
to practically completion stage by year end
• 597 households benefited from houses completed
Additional work completed• 144 houses completed in
Germiston Social Housing
Health Programme• Clinic facilities maintenance in NHI
districts
‒ 4 NHI clinics were practically completed by year end
• VCT II – clinic construction
‒ 21 clinics have achieved practical completion
‒ 266,000 people benefited
Additional work completed• 6 Limpopo storm damaged clinics
refurbished during the year
• 3 new clinics completed in Ekurhuleni Metro Municipality
Before After
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The DBSA IS MANDATED TO PROMOTE ECONOMIC DEVELOPMENT AND GROWTH
Before After
6
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DBSA role in Local Government
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Key Issues in Local Government
Spatial fragmentation and low density settlement patterns that:― Deepen inequality and exclusion ― Constrain productivity growth― Weaken fiscal sustainability
…while current programmes deepen the fiscal challenge through addressing symptoms not causes
Expanded investment in core infrastructure to support: ― Inclusive densification in targeted urban integration zones― Universal access to basic services― Asset refurbishment and replacement
Deeper access to private financing needed to expand resources available for investment through:
― Longer tenure debt, broader participation (institutional market) and innovation in financial instruments
― Less reliance on grants
1
2
3Source: National Treasury
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Rapid urbanization and human settlement infrastructure challenges― Spatial fragmentation and low density settlement patterns
Debt burden of municipalities to bulk service providers
Inadequate, inconsistent and uncoordinated state support for:― Municipal long‐term financial management plans― Infrastructure investment planning
Poor financial management capacity in many under‐resourced municipalities
Municipal infrastructure programmes delivered by private sector and non‐municipal entities
Diminishing technical capacity to implement and supervise projects
Key Issues in Local Government
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Inability of Metros to spend their full capital expenditure budget― Inefficient use of the capital expenditure budgets by municipalities
Small number of municipal borrowers ― Only a limited number of secondary cities come to market
Lack of infrastructure planning capacity
Insufficient implementation skills and capacity
Sustainability of jobs created through projects
Key Issues in Local Government
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Perfect Storm: Declining Income & Rising Service Delivery Needs
Unemployment increasing
Inability and reluctance of consumers to pay for services
Negative consumer sentiment
Source: SACN
20
30
40
50
60
70
80
2009 2010 2011 2012 2013 2014
Perc
enta
ge
Consumer debtors as a percentage of own revenue (%)
CoJ CoCT eTH CoTEku NMB Man BCM
Number of municipal protests per year
Most protests are the result of service delivery issues
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SA’s Cities (Metros and Intermediate cities) Have the Potential to Drive Growth and Create Jobs
GVA rates have been declining since 2007 SA population increasingly urban-based due
to rapid urbanisation― Metro populations grew by 1.9% since
2003― But lack of spatial integration
Infrastructure under more pressure
- 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000
Budget Actual Budget Actual Budget Actual
2014/15 2015/16 2016/17
Actual capex vs budgeted capex – 2014/15 to 2016/17 (R’bn)
Grants Borrowing Own Revenue
Source: DBSA Analysis
However, most municipalities dependent on grant funding
― No economic base― Lack of capacity and capability― Fiscal effort
Grants are targeted mainly for:― Inclusion of the poor― Improving financial position― Support operational performance
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
2007 2008 2009 2010 2011 2012 2013 2014City of Cape Town Ethekwini EkurhuleniCity of Johannesburg Nelson Mandela Bay City of TshwaneMangaung Buffalo City
GVA annual growth rates (%)
Source: DBSA - IHS Global Insight
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DBSA Loan Book by Sector – R75.7bn
Source: DBSA Annual Report 2017
1.3 0.6
0.4 0.3
0.44.9
58.1
0.51.4
0.0
1.8 18.1
1.9
6.63.8
Sectoral analysis (%) – 2017
Commercial - fund Commercial - manufacturing Commercial - mining Commercial - tourism
Commercial - other Comms and transport infrast. Energy - electricity Energy - non-grid standalone
HR development Institutional infrast. Residential facilities Roads & drainage
Sanitation Social infrast. Water
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1.0 0.9 0.8 0.8 1.0
15.8 15.0
18.2
24.6
27.0
10.9 15.3 16.4
18.7 19.514.7
18.1
21.2
25.8 25.5
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2013 2014 2015 2016 2017
Loan book (R’bn) per client classification – 2013 to 2017
Educational Inst Local Gov.Priv Sector Int. Public Utilities
3.9 2.2
0.3 0.10.3
2.5 2.7 2.2 1.6 1.3
22.8
15.014.0
11.2
8.9
2.01.7
1.4
0.80…
0.0
5.0
10.0
15.0
20.0
25.0
2013 2014 2015 2016 2017
NPL’s (%) per client classification –2013 to 2017
Educational Inst Local Gov.
Priv Sector Int. Public Utilities
• We love municipalities at DBSA• Most municipalities do pay• Don’t lend to vulnerable municipalities without helping them• Help vulnerable municipalities to become well-run• Hold the hand of municipalities that get into trouble
5-year evolution of DBSA Loan Book– R75.7bn
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DBSA: Our New Approach to Local Government
Municipalities that can borrow (metros and intermediate cities)
• Differentiated Financing Solutions
o Credit Enhancements structures: e.g. Guarantees
o Securitisation
o Large Urban Centre Infrastructure (LUCI)
o Supporting private sector and non-municipal entities to deliver municipal infrastructure
• Facilitation of growth strategies with private sector
o Housing Development Agency (HDA) Programme:
Rehabilitation of Distressed Mining Towns
Catalytic Projects
• Specialized planning and project preparation services
Municipalities with potential to borrow within 3 – 5 years
(intermediate cities)• Municipal Support Services
o Revenue Enhancement Programmes
o Long term financial strategies and investment plans for targeted municipalities
• MISA/DBSA/NT/DWS –Reticulation Programme
• North West – Water and Sanitation Programme
• Specialized planning and implementation services
Municipalities unlikely to borrow within 5 – 10 years (under-resourced
municipalities)• Partnering with government and
government entities
o Operation Amanzi
o North West - Water and Sanitation Programme
o Infrastructure Planning Support Project Preparation Support
o Project Implementation support for projects funded by Government
o Financing through frontloading conditional grants
• Increased number of infrastructure plans which is linked to infrastructure development.• Increased number of projects referred for preparation support.• Increased value of catalytic funding unlocked resulting from DBSA lending and non-lending
support.• Improved spending of conditional grants and loans in municipalities.• Increased value of identified projects from DBSA supported Infrastructure Plans that are
prioritized in Municipal IDPs.• Increased number of DBSA-funded projects completed.• Increased development results.
…resulting in…
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OUTLOOK
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THE DBSA WILL TARGET R100 BILLION p.a. IN INFRASTRUCTURE SUPPORT BY 2020
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Total Infrastructure support, R billion
2128
48
60
75
100
0
20
40
60
80
100
120
2015 2016 2017 2018 Planned 2019 Planned 2020 Planned
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STRATEGIC SHIFT REQUIRES …30
Plan Prepare
DBSA’s five-pronged strategy for impact
• Project Preparation – Invest more in early-stage project development; crucial bottleneck in infrastructure
• New infrastructure programmes – Take lessons from REIPPP programme and apply to other sectors in SA and in rest of the Continent
• Structured products – Develop new funding structures to crowd-in private sector investors
• Maintenance of public infrastructure – Support government to manage existing infrastructure
• Partnerships – Leverage expertise and balance sheet of our partners to have a greater impact
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Through Partnerships We Will Achieve More Together
Competitor and Partner
segmentSector Offering to clients Challenges and opportunities
for collaboration
RSA commercial banks
MetrosSecondary Municipalities
Balance sheet lending Basel III - <10yr tenureFinancial support
Crowding in (Catalysation)Develop lending mechanism to combine commercial banks and DBSA lending (longer tenure)
Global DFIsKfW, AfDB, EIB, IFC etc
MetrosSecondary Municipalities
Project planningProject preparationImplementation support
Mainly project specific lendingIncreasingly doing general purpose loans
National Treasury
MetrosSecondary MunicipalitiesUnder resourced Municipalities
Grants to municipalitiesProject planningProject preparationImplementation support
Collaborate to support local governmentBEPP process
COGTA, DOE, DWS, MISA, International donors and Organisations
MetrosSecondary MunicipalitiesUnder resourced Municipalities
Grants to municipalities and provincesProject planningProject preparationImplementation support
Collaborate to support local governmentBulk infrastructure: Water; Electricity; Sanitation
Institutional investors
MetrosSecondary MunicipalitiesUnder resourced Municipalities
Bonds Crowding in (Catalysation):Guarantees; Pooled financeLengthening tenor; increasing number of issuers; off-balance sheet instruments (Revenue & TIF bonds); market making?
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NATIONAL(RSA)
1
REGIONAL (AFRICA)
2
GLOBAL
3
WHO ARE OUR PARTNERS???
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Thank You