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

|

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

|

DBSA’s Corporate Structure

3

CEO

Coverage Project Preparation Financing/ Transacting

Infrastructure Delivery(IDD) 

Treasury & Balance 

ManagementChief Risk Officer

Financing Operations

Corporate Services

ChiefFinancial Officer 

Chief Investment Officer

|6

DBSA Integrated value proposition

|| 4

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

|| 8

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

|

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

|

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

|

Qualifying Bulk Infrastructure

11

|

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:

|| 13

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

|14

DBSA performance overview and development impact

|

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

||

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

|

BENEFITING COMMUNITIES WITH NEW AND IMPROVED INFRASTRUCTURE

17

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

||

The DBSA IS MANDATED TO PROMOTE ECONOMIC DEVELOPMENT AND GROWTH

Before After

6

|19

DBSA role in Local Government

|20

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

|21

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

|22

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

|23

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

|24

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

|25

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

|26

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

|27

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…

|28

OUTLOOK

|

THE DBSA WILL TARGET R100 BILLION p.a. IN INFRASTRUCTURE SUPPORT BY 2020

29

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

|

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

|31

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?

|| 32

NATIONAL(RSA)

1

REGIONAL (AFRICA)

2

GLOBAL

3

WHO ARE OUR PARTNERS???

|| 33

Thank You