ANNUAL REPORTS

Chief Executive Officer’s report continued
Regrettably, this preparatory work does not make for good
news in an environment where delivery is long overdue.
This has been compounded by poor communication
concerning the work that is being done and the changes that
are being made.
The fortunes of the DBSA are inextricably linked to those of
its shareholder, the South African government, and the ties
have strengthened progressively over the past 18 months.
However, we are acutely conscious of the growing anxiety in
South African society, given what on the surface appears to
be lethargy within the bureaucracy. The DBSA has virtually
placed its resources at the disposal of government, though
strategically so. A huge investment has been made in crafting a
delivery framework, as desired by the shareholder, that should
change the government’s approach in this regard, and we are
convinced that this will relieve most of the anxiety and alleviate
the current negative discourse on government performance.
While this investment has entailed a huge, unfunded cost on
the part of the Bank, both directly and in terms of opportunity,
the Minister and the Board concur that the shift is worthwhile in
light of the challenges the country faces. A comforting factor
in relation to financial sustainability is that much of the cost
incurred is recoverable over the medium term (three years)
from the robust investment pipeline that is emerging.
Operations review
Overall, the Bank performed well in 2010/11, with record
investment approvals of R37,1 billion. Of these, 83% were
on projects in South Africa. Commitments were also high, at
R13,9 billion. Disbursements of R8,3 billion were on par with
the previous financial year, but are considered satisfactory
given the unfavourable economic conditions and the
underspend on the public sector infrastructure budget.
The performance of the International Division was marked by
strong growth in the Bank’s mandated origination activities,
both locally and into the region. A concerted business
focus on driving investments in key strategic priority sectors
in the region, such as transport infrastructure, financial
intermediation, ICT and healthcare, resulted in significant
business growth. Project approvals of R6,3 billion were
achieved, compared to R4,9 billion for 2009/10. Commitments
of R4,4 billion were achieved, while disbursements increased
more than threefold over 2009/10 to R3 billion. There
should be further significant growth as the Bank’s bold
strategy on larger mandates in the region unfolds. A more
exciting development has been on the local front, where
a closer collaboration with government saw the Bank
formally adopting infrastructure mandates well in excess of
R100 billion. The segmental reports provide more details on
the various initiatives under way.
Our non-financial assistance to local government focused
largely on maintaining our investment in building the
institutional capacity of municipalities to deliver services
to households and the business community. This entailed
identifying and addressing the bottlenecks and constraints
which hamper the ability of municipalities to scale up
service delivery and to provide services more efficiently
and effectively. The DBSA’s initiatives and programmes in
this regard are an integral component of its developmental
business model. They include the Siyenza Manje programme,
training interventions by the DBSA Vulindlela Academy, the
Rural Development programme, and a new Operations and
Maintenance support programme.
The Siyenza Manje programme remains the Bank’s flagship
capacity building intervention. In the year under review,
through Siyenza Manje the Bank deployed 826 professionals
to 186 municipalities and 20 provincial departments; helped
to complete 1 114 technical and 1 994 non-technical projects;
and expedited Municipal Infrastructure Grants (MIGs) to the
value of R8,7 billion.
If total direct disbursements of R8,3 billion by the Bank in
South Africa and elsewhere in the region are added to this
amount, overall funding “beneficiation” totalled R17 billion,
which significantly exceeds the target of R15,2 billion for
2010/11.
Total financial value of DBSA interventions
(including MIGs), 2006/07 to 2010/11
R million
18 000
16 000
14 000
12 000
10 000
8 000
6 000
4 000
2 000
0
2006/07 2007/08 2008/09 2009/10 2010/11
Development expenditure Loan and equity disbursements MIGs unblocked
Regarding the outcomes of the Bank’s core capacity building
interventions, it is estimated that some 746 764 households
benefited from improved access to water and some
585 204 households from improved access to sanitation.
Of the municipalities to which financial specialists were
deployed, some 64% recorded improvements in audit
outcomes. More than 11 381 external learners were trained
through the Vulindlela Academy, significantly above the
target of 10 000 for 2010/11.
Although the bulk of these interventions are unfunded, the
Bank remains financially sound. Its investment-grade credit
rating has been maintained and the net interest margin has
improved over the previous year. Operating costs are being
managed responsibly within the prudent limits set by the
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DBSA DBSA | ANNUAL | ANNUAL REPORT REPORT 2010/11 2010/11