ANNUAL REPORTS

Chairman’s report
During the year under review, the Bank began to reposition
itself as a centre of excellence for the development and
financing of infrastructure.
In line with our renewed compact with the shareholder, the
DBSA Board approved a revised corporate strategy and new
strategic initiatives that herald a new level of engagement
and a new approach to infrastructure development. This
new approach is coordinated with national departments in
government, state-owned enterprises and industry. It is set
to accelerate and scale up infrastructure delivery in a way
that is integrated, programmatic and sustainable, and also
yields value for money. This represents a move away from a
historically more passive and fragmented approach, where
the focus was on individual projects, mostly at local level.
I am pleased to report that we are already gaining traction
on our new path: levels of new investment approvals and
commitments increased dramatically from the previous year,
rising by 97,3% and 86,4% respectively. The record levels
of approvals and commitments feature landmark Bank
support for priority infrastructure projects in key sectors
such as energy and transport, in close partnership with
Eskom and other state-owned enterprises, both in the
country and the wider region. This traction is being achieved
despite the uncertain global economic and business
environment, which continues to generate volatility in capital
flows and foreign exchange markets, among others.
Our new strategy is informed by the five priorities of
government, which is shaping the future strategies, programmes
and modus operandi of government departments, state-owned
enterprises and development finance institutions. It will see
the Bank play a central role in expanding and accelerating
socio-economic infrastructure delivery and job creation in
the country. The Bank will be a key facilitator and co-financier
of public infrastructure worth hundreds of billions of rands
to be developed in the medium and longer term.
Towards this end, the Bank has embarked on new
partnerships with several national departments to assist in
identifying, implementing and financing infrastructure and
other development solutions. Specific agreements have
been concluded with the Department of Energy and the
Department of Health on new investment programmes in
the areas of green energy and the refurbishment or
development of hospitals. Other agreements are being
negotiated in the areas of water and sanitation, education
and human settlements. Already, in the past year, the Bank
approved a landmark loan facility of R15 billion to support
Eskom’s multi-year expansion plan; of this amount, R3 billion
has been committed and R1 billion disbursed.
Importantly, the Bank has concluded an agreement with
government to manage the newly announced national
Jobs Fund, which is a cornerstone of the five priorities of
government. It is well known that job creation is an overarching
goal of government strategy, and the new fund will play an
instrumental role in this regard, in partnership with the private
sector and other key role players. The Bank is honoured
to have been entrusted with such an important initiative.
Our national thrusts have in no way diverted the Bank’s
attention and focus from its crucially important role in
facilitating the delivery of municipal infrastructure and
services. We recognise that institutional capacity and
governance constraints in the local sphere of government
remain a major challenge and continue to impact negatively
on the delivery of services. The DBSA is ready to sustain the
ongoing financial and technical support it provides to local
government structures.
Our repositioning is not confined to the domestic arena;
it also extends to the Bank’s international engagement.
Our recent appointment as South Africa’s representative
bank in the BRICS Banking Mechanism has paved the
way for new international partnerships that will enable the
DBSA to strengthen its role and increase its contribution
to infrastructure development in Africa. In addition to new
development finance partners from the BRIC countries,
new partnerships are also being forged with the Public
Investment Corporation and the Pan-African Infrastructure
Development Fund. At the same time, existing partnerships
with the Industrial Development Corporation and the African
Development Bank are being strengthened, alongside our
traditional international development finance partners in
Europe and Japan. This network of international partnerships
will enable the Bank to establish its new institutional
positioning in the Africa region.
As regards our overall business performance in 2010/11,
I am pleased to note that the DBSA has yet again achieved
admirable results, despite the many challenges in its
operating environment. Project approvals for the year
reached an all-time record of R37,1 billion, of which 83%
is attributable to projects in South Africa.
However, several factors, including the uneven economic
recovery and the structurally weak position of many
municipalities, put a brake on the pace at which
infrastructure projects were implemented, particularly at
local government level. This served to limit the full potential
of DBSA loan disbursements to municipal infrastructure
projects. Nevertheless, the concerted efforts of the Bank
and its partners within government expedited the targeted
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DBSA DBSA | ANNUAL | ANNUAL REPORT REPORT 2010/11 2010/11