Development Bank of Southern Africa - Department of Trade and ...

Development Bank of Southern
Africa

Select Committee on Trade and
International Relations: DBSA’s role in
facilitating SMME Development
30 May 2012

Agenda
• Background and mandate of DBSA
• Development Fund
• Jobs Fund
• Accelerated Schools Infrastructure Development
Initiative (ASIDI)
• Rural Economic Development Initiative (REDI)

Background and mandate of DBSA
• The DBSA is one of the Development Finance Institutions (DFIs)
in South Africa;
• Wholly owned by the Government of South Africa;
• Shareholder representative is the Minister of Finance

Background and mandate of DBSA contd
DFI’s: Development Finance Framework in SA
ID
C
Industrial
Development
Land
Bank
Agriculture:
onsite
DBS
A
Infrastructure
Development
KHU
LA
Small bus.
Development
NAT. HOUSING
FINANCE CORP.
Housing Finance
• Wholesale development finance institution:
• The DBSA: Part of the family of 5 DFI’s,
• DBSA - Act of 1997 :
• To promote economic development and growth, human resources development,&
institutional capacity building in the region;
• To support sustainable development projects and programmes in the region.

Background and mandate DBSA
Infrastructure Development Finance in
South Africa and the rest of the
Southern African Development
Community (SADC)
Co-deliver social and economic
infrastructure
Build human and institutional capacity
Promote broad-based economic
growth, job creation, cooperation,
integration and prosperity
Serve as a centre of excellence for
development financing, effectiveness
and good governance.
Engender sustainability, external and
internal

Background and mandate DBSA
Historical
• The Development Bank of Southern Africa (DBSA) (www.dbsa.org) is wholly owned by the SA government, and was established in
1983 to perform a broad economic development function within the homeland dispensation that prevailed
Current
• Since the new democratic order in 1994, the role of the Bank has evolved to accelerate both economic and social infrastructure
development for the benefit of all citizens in both South Africa and SADC region
• Today, the DBSA is uniquely positioned to support the development challenges in South Africa. Its client facing operations is
structured to unlock value across three broad prevailing challenges: social transformation; economic stimulation and institutional
capacity building
Social Transformation
Economic stimulation
Institutional
Capacity Building
Prevailing
Challenges in
Africa
Early stage development and
investment in large-scale
infrastructure projects to address
backlogs and expedite service
delivery
Early stage development and
investment in large-scale infrastructure
projects to stimulate economic
activities and economic growth, reduce
bottlenecks and drive long-term
sustainability
Actions aimed at
enhancing
institutional ability to
plan, implement and
manage large-scale
infrastructure
projects
Aligning core
bank operations
to address these
challenges
South Africa
Operations
Financing
Municipalities in
South Africa
Investment
Banking
Financing public
sector national
programs that deliver
bulk infrastructure
International
Division
Financing outside
South Africa
Development
Fund
Programs to address
institutional
weaknesses

Background and mandate DBSA
Priority sectors
Channel
• The Investment Banking Division’s focus is on originating infrastructure development projects within priority sectors largely prioritised
to expedite infrastructure delivery, as well as to support economic growth required to stimulate employment and alleviate poverty
• New business is originated by a team of seasoned investment professionals through leads obtained from private sector, but also through
upfront engagement with public sector in order to assist with early stage project development and financing during bankability stages
Health
Water
Energy
Transportation
Telecoms
• Public hospitals
• Clinics
• Pharmaceuticals
• Professional
Training
• Bulk raw water
infrastructure
• Bulk water
services
• Renewable
Energy
• Independent
Power Producers
(IPP)
• Generation
• Rail
• Roads
• Ports
• Pipeline
• Passenger
transport
• Fixed line
• Wireless
• Fibre-optic
Education
Human Settlements
Mining/Resources
Tourism
Other
• Tertiary
education
• Basic education
• Affordable
housing (metros,
2nd tier cities)
• Retail/commerci
al (townships)
• Resource
beneficiation
• New mine
exploration
• Game
parks/lodges
• Hotels
• Financials
• Construction

DBSA SMME development initiatives
• Although SMME not direct mandate of DBSA, the Bank
facilitates SMME development through, amongst others:
– Development Fund
– Jobs Fund
– Accelerated School Infrastructure Development Initiative
(ASIDI)
– Rural Economic Development Initiative (REDI)

Development Fund – Operations & Maintenance (O&M)
Programme
Mentorship provided:
iers and equipment providers
tensive construction
cured MOUs with:
ess management
Contract Work Opportunities in O&M work at municipalities
ll Equipment
management skills
l Employment Fund
ided during 2010/11 and 2011/12 FYs
SMME Capacity Building Support on Operations and Maintenance

Development Fund (O&M)
Number of municipalities
implementing the
programme
Number of SMME’s
benefitting from the
programme
• Target: 10 • Target: 30 • Target: 24
• Actual: 10 • Actual: 55 • Actual: 25
• The O&M programme was
implemented in the following
municipalities:
• Eden district,
• Hessequa,
• Kannaland,
• Dipaleseng,
• Bushbuckridge,
• City of Tshwane,
• Thabazimbi,
• Ga-Sekonyane,
• Mogalakwena,
• Gamagara.
• The DBSA provided grant
funding of R960 000 to train 50
SMMEs on labour intensive
construction, business
management and project
management skills. This
intervention resulted in the
allocation of O&M projects to
SMME’s in the Eden district
municipality.
O&M plans developed and
implemented
• 24 O&M plans were developed
and will result in prioritised
maintenance projects included
in the Integrated Development
Plans (IDPs) and annual budgets
of municipalities.

Development Fund – Other SMME Assistance
ENTITY
Malamanana Bricks –
BaPhalaborwa
Namakgale Hawkers facility,
BaPhalaborwa
ASSISTANCE
• Assistance with registration as cooperative
• Access to training
• Assistance with project management – site preparation, water supply
and contracting through the DF Deployee
• Facilitated access to facilities funding (Neighbourhood Development
Partnership Grant) and funding of security fence
• Training of hawkers
Namakgale Taxi rank,
BaPhalaborwa
Transido Business Centre
Mthatha
• Facilitated access to facilities funding (Neighbourhood Development
Partnership Grant)
• Negotiations with Eastern Cape Development Corporation for upgrade
of centre
• Facilitated funding of R33 million from Neighbourhood Development
Partnership Grant for re-development
• Project Management support
Coastal Cashews • Production Inputs grant of R900 000
• Technical capacity building through the deployment of Agricultural
Specialist
• Board training on Governance
• Turn-around strategy for operations

Development Fund – Other SMME Assistance
ENTITY
ASSISTANCE
Elliotdale Housing • Identification of local contractors
• Contractor training
Wassup – Diepsloot for
water and sanitation
maintenance
Midrand Construction skills
Training Centre
• Designed and incorporated the Housing support centre to provide
plans, procurement of material and quality assurance to local
contractors
• Facilitated contract with the City of Johannesburg for Wassup
• Seed funding of R800 000 for Co-operative
• In partnership with Group 5, financed and operationalised the fully
accredited Midrand Training Centre
Keiskammahoek • Linking paprika farmers with Unilever
• Technical capacity building
o deployment of Agricultural Specialist
o Training by Small Enterprise Development Agency (SEDA) and
National Department of Agriculture
• Grant funding for production inputs and labour
Grabouw: Elgin Training
College
• Funding of upgrade and assistance with accreditation of the Elgin
Training College
• Training linked to Rooidakke Housing development

Jobs Fund
• Key operational aspects of the Jobs Fund scoped and completed, including the
Application Capturing System, Eligibility Assessment Tools and Policies &
Procedures documents.
• 2,651 applications were received from the first call for proposals.
• The Enterprise Development window attracted the most applications, at 51%,
and followed by Work Seekers, Infrastructure and Institutional Capacity Building
and 23%, 17% and 9% respectively.
• It is estimated that 186 238 jobs will be created by the first round of approved
projects.
• Approval progress to date is summarized follows:
Projects approved to the value of R1.8 billion
Eligible applications
Applications received

Jobs Fund
Enterprise
Development
Infrastructure
Investment
Work-Seeker
Support
Institutional
Development
Preliminary targets for three years
Expenditure
(R mil)
Co-Funding
(R mil)
Number of
Projects
Sustainable
jobs created
Net income
added
(R m a year)
3 500 7 000 700 100 000 1 500
4 000 2 000 250 20 000 400
1 000 500 200 20 000 400
500 500 200 10 000 200
Total R9 000m R10 000m 1 350 150 000 R2 500m
Operational overview (as at 31 March 2012)
Applications received 2 651
Grant funding approved
R1,835 million
Matched funding
R1,739 million
Total project value
R3,574 million
Projected jobs 186 238

ASIDI
Accelerated Schools Infrastructure
Delivery Initiative (ASIDI)
The ASIDI program comprises of the following primary aims:
• Eliminate the backlogs in schools infrastructure.
• Upgrade the standard of schools to meet the optimum functionality levels
prescribed by Norms and Standards for Schools Infrastructure.
• Eradicate inadequate, unsafe and poor physical infrastructure (395 unsafe
schools in the Eastern Cape) by properly utilising allocated funds.
• Benefit over 12 300 learners from the first 49 schools under construction.
One of the schools that will be replace
Progress made
• Detailed planning and preparation of the initial 49 schools was completed.
• 16 construction companies were appointed in January 2012 for the
building of the 49 schools in Umtata, Libode and Lusikisiki districts.
• The construction of 49 schools sites is in progress.
• The construction programme is expected to be completed by 31 August
2012.
• At the end of the financial period, 27 SMMEs had benefited from the
construction activities.
• Over 796 temporal jobs were created for the local communities.
Progress at Dakhile school

Rural Economic Development Initiative (REDI)
• Key element of REDI
– Strategic Choice
– Strong Multi-stakeholder Partnership
– Fast Track Delivery
– Technical Support

REDI Approach
REDI unlocks finance for catalytic economic infrastructure projects as well
as the development and implementation of economic turn-around
strategies within areas of economic potential with the aim of stimulating a
reconfiguration in national and local space economies in order to foster
shared growth and financial sustainability
Strategic Choice
Measurable, practical link btw
economic growth, service
delivery & financial
sustainability
Technical Support
Leading technical experts
plus effective process
facilitators makes ED
work
Strong Multi-Stakeholder
Partnerships
Strategic private & public
partnerships forged focused
on real opportunity
Fast-Track Delivery
Unblocking grants & EIAs,
rezoning, land transfer
processes & institutional
constraints

Achievements of REDI
• Cacadu District Municipality
– 50 Catalytic development Projects identified
– 35 provided with assistance
– 15 referred to various financial institution for
finance
– Potential for R400 million to be invested in Cacadu
– DBSA financial commitment of R7.8 million
– R14 million crowded in to co-fund identified project

Achievements of REDI
• Cacadu District Municipality
– Eastern Cape Pineapple Industry in Bathurst
• Beneficiation of pineapple
• High dietary fibre by-product of pineapple
commercialised
• Team currently converting Pineapple Leaf Fibre to
Micor-Crystalline Cellulose (MCC)
• Team converting Pineapple Stump Juice to Bromelain
– 15 referred to various financial institutions for
finance
– Successful commercialisation of MMC and

Achievements of REDI
• Theewaterskloof REDI
– 40 catalytic development projects identified
– 15 provided with packaging assistance
– R110 million referred to various financial
institutions for finance
– R90 million crowded in to co-fund identified
projects
– 20 new tourism business opportunities created
– 10 new enterprise opportunities indentified

Achievements of REDI
• Theewaterskloof REDI
– 1133 jobs created
– Unlocked partnerships with
• Stellenbosch University
• The Department of Education (Basic or Higher?)
• PUM mentorship and support programme
• South African Breweries
– Partnership between biking enthusiasts,
Municipality and Cape Country Meander
• Increased biking track from 200 kilometres (kms)
to 500 kms

Achievements of REDI
• Ugu District REDI
– Umzimkulu Sugar Mill reopened
– Partnership between the Department of Rural
Development and Land Reform and Illovo Sugar
• Entered into a partnership to revitalise small grower
programmes
• Ugu District Municipality facilitating the revitalisation of
North Pondoland Sugar Scheme in Alfred Nzo District
Municipality

Achievements of REDI
• Ugu District REDI
– 40 catalytic development projects identified
– 21 of these provided with packaging assistance
– 21 referred to various financial institutions for
funding
– DBSA financial commitment of R7.5 million
– R328 million crowded in to co-fund identified
projects
– Potential for R2 billion to be invested within Ugu

Achievements of REDI
• Building strong public-public and publicprivate
partnerships
– At a strategic level
– At a sectoral level
– At a project level

Achievements of REDI
• Lessons learnt
– Importance of long term view
– Focus on planning through doing
– Work with a large and diverse portfolio
– Drive process through multi-stakeholder
partnership approach
– Balance between retaining and growing
businesses
– Committed and dedicated champion
– External process facilitation

Thank you