financing ict’s development presentation to the public & private sector partnership forum...
TRANSCRIPT
Financing ICT’s Development
Presentation to the Public & Private
Sector Partnership Forum
Kampala Uganda
31 October – 2 November 2004
Representatives
Mr Lewis Musasike
Executive Vice President, Private Sector and International Investments Cluster
Tel: +27 11 313-3066
Ms. Desnei Leaf-Camp
Project Manager, International Finance Unit
Tel: +27 11 313-3126
Introduction
DBSA is a Development Financial Institution (“DFI”) wholly owned by the South African Government
DBSA is the primary vehicle for promoting infrastructure development in South Africa
Operates in the Southern African Development Community countries, focusing on infrastructure sectors supportive of economic growth
DBSA had total assets of about ZAR 23.7 bn (*US$3.6 bn) at the end of March 2004, and currently employs 500 people
SADC lending and investment portfolio has grown to ZAR 8.3 bn (US$1.28 bn)
DBSA is one of the largest DFI’s in Southern Africa
Who is the DBSA?Who is the DBSA?
* Exchange rate of R6.5/1$
Vision and Mission
Vision To further the progressive realisation of an empowered and
integrated region, free of poverty, inequity and dependency
Mission To maximise the Bank’s contribution to development by
mobilising and providing finance and expertise and by establishing partnerships to develop infrastructure to improve the quality of life of the people of Africa
Triple Role Investor Advisor Partner
Our GoalsOur Goals
Financial Structure
Self Funding The Development Bank is a self-funding institution and raises its
funding from domestic and international capital markets, bilateral and multilateral institutions, and internally generated resources.
The Bank has access to a callable capital facility of R4,8 billion, which is part of its capital structure
Investment grade rating Fitch: AAA: domestic rating (stable) Moody’s: Baa2: international rating (positive outlook) Standard and Poor’s: BBB: international rating (positive outlook)
Financial Strength (FYE 2004) R23.7 bn total assets R11.2 bn capital and reserves R1.4 bn operating income
Financial StructureFinancial Structure
Lending and Investment Strategy
Sustainable projects
Focus on projects and programmes with maximum development impact
Job creation Poverty alleviation GDP contribution Regional and Economic integration
Technical assistance for capacity building
Partnerships Government Private sector Other DFIs
Business StrategyBusiness Strategy
DBSA and its Business
Loan Finance Long-term loans Co-financing
Equity Finance Limited ability for equity participation
Guarantees
Technical and preparation assistance
Non-Financial Advisory services Agency functions Capacity building Development information Public/Private sector facilitation Policy research, analysis and support
Products and ServicesProducts and Services
Financing Terms and Conditions
Terms are dependent on the nature of the project and risk assessment
Maturity: Up to 20 years for Rand financing (depends on
currency)
Repayment: Capital grace during construction
Ranking: Senior and subordinated debt
Fees: Upfront and commitment fees, but negotiable
Interest Rate: Fixed rate or floating rate
Currency: Rand, US, Euro
Co-financing: Aim for maximum DBSA contribution of 50% of
financing needs
Loan TermsLoan Terms
The DBSA and NEPAD
The Bank currently supports the goals of NEPAD through:
Providing logistical support
Providing advisory services to the secretariat
The establishment of a R25 million Project Preparation Facility in partnership with Agence Française de Développement
Focus of DBSA support:
Advocacy
Policy support and agency role
Resource mobilisation
Investment within SADC
Support to NEPADSupport to NEPAD
Strategic objectivesStrategic objectives
DBSA’s SADC Portfolio Coverage
• R8,3 billion committed to projects in SADC (excluding South Africa)
COMMITMENTS WITHIN SADC (excl SA) in ZAR
Namibia10%
Seychelles1%
Malawi3%
Mauritius6%
Swaziland10%
Tanzania1%
Moz41%
Zambia10%
Lesotho19%
Botswana6%Angola
3%
Sectoral Analysis of DBSA Funding to SADC
SECTORAL ANALYSIS FOR COMMITED SADC PROJECTS
Tourism3%
Education0%
Sanitation1%
Institution building
0%
Water19%
Roads and drainage
12%
Commercial20%
Social infrastructure
2%
Residential facilities
0%
ICT (Communications)
7%
Energy36%
Importance of ICT Sector for Development
Enables efficient business to business communications and trade
Improvement in productivity and economic efficiency
Attracts foreign direct investment
Role of information and communication in promoting good corporate governance and democracy
Information and communication as essential elements in global knowledge-based economy
Understanding the ICT Sector in the SADC Region Separation of posts and telecommunications, and from
Government departments
State owned public in telecommunication operators corporatised
Privatisation is slow
Liberation of telecommunications market segments (e.g. mobile; IPS, etc)
Growth in mobile services has overtaken fixed line services growth
Establishment of autonomous regulatory authorities
ICT policy and legislation relatively underdeveloped
DBSA’s Role in the ICT Sector
Demand for Development Finance is high
Current review of DBSA strategy on Privatization of telecoms; digitization of fixed line
networks Implementing country specific ICT strategies Prioritization of projects for investment Expand current focus on communications to include
information services such as broadband high-speed data transfer
Therefore two Roles Policy and Regulation development Provide finance for the privatisation of the ICT Sector
DBSA’s Capabilities in the ICT Sector
Swaziland Post and Telecoms Corporation I Project Description: Refinancing of the upgrading of the Swaziland
telecommunication network to be Y2K compliant and installation of cable/switching infrastructure. Total project cost ZAR 42.9 million
DBSA Loan: ZAR 42 million senior loan with maturity of 20 years
Swaziland Post and Telecoms Corporation I Project Description: Expansion of switching capacity through
installation of a wireless local loop system and upgrading of the billing and customer care system. Total project cost ZAR 113 million
DBSA Loan: ZAR 113 million senior loan (in 2 tranches) with maturity of 10 years
Celtel International B.V. (formerly MSI – Africa) Project Description: Short-term corporate loan DBSA Loan: US$ 30 million with 3 year maturity
DBSA’s Capabilities in the ICT Sector
Cell C Project Description: Cell C was granted the 3rd mobile phone license in
South Africa in 2001. The funding was for rolling out the GSM network countrywide. Project cost = R7.4 billion
DBSA Loan: R300 million senior loan with 9 year maturity
Telecom Lesotho Project Description: Corporate funding for fixed line and mobile network DBSA Loan: R 2.9 million loan with 5 year maturity
TDM Transmission Backbone - Mozambique Project Description: submarine optical fibre cable and corresponding
transmission equipment along the Maputo – Beira line. The total project cost US$ 33 million and included financing from TDM the state-owned utility (equity) and KfW.
DBSA Loan: Limited recourse US$ 21.3 million senior loan with 12 year maturity including 2 year capital grace
(Continued)
DBSA’s Capabilities in the ICT Sector
Maputo Network Expansion and Modernisation – Mozambique
Project Description: Expansion and modernisation of the telecom network in Maputo. The total project costs US$ 37.5 million.
DBSA Loan: Limited recourse US$ 14 million senior loan with 10 year maturity including 2 year capital grace
Celtel Zambia Limited I - Zambia Project Description: Installation and operation of a
nationwide GSM-based digital cellular telecommunications network at a total project cost of US$ 16.9 million.
DBSA Loan: US$ 4.5 million loan with 7 years maturity
(Continued)
DBSA’s Capabilities in the ICT Sector
Celtel Zambia Limited II – Zambia Project Description: Expansion of the existing nationwide GSM-
based digital cellular telecommunications network. Total project cost US$ 11 million
DBSA Loan: US$ 3.3 million with 7 years maturity
(Continued)
DBSA’s Capabilities in the ICT Sector
Financing of concession and privatization initiatives in fixed line telecommunications networks
Issue of Second Network Operator license
Fiber Optic installation for additional ICT services such as broadband internet, intra-bank clearances, high-speed data transfer
Projects in 5 SADC countries
(Continued)
PROJECTS UNDER CONSIDERATION
The DBSA’s Strengths
Flexible and competitive lending terms and conditions
Diverse and deep skills in development
Understanding of the region
Strong track record
Quick response and turnaround time
Strategic alliances with other DFI’s
Well capitalised, profitable and access to diverse funding sources
Investment grade ratings
The ideal regional development partner
The ideal regional development partner