DBSA changes tack in bid to boost ‘bankable’ projects
THE Development Bank of Southern Africa, which disbursed R12.4-billion in infrastructure finance for the year to March, will direct more funds to early-stage investing to crowd in greater private sector investment, client coverage head Mohan Vivekanandan says.
Early-stage investing could help a project become bankable, attracting commercial banks and other private investors, Vivekanandan said on Tuesday.
For the year to March, the bank catalysed R31.9-billion in investment from third parties. This contributed the lion’s share to its total infrastructure development impact of R48.2billion and compared with R12.4-billion in disbursements from its own balance sheet.
It is now widely accepted that traditional development finance institutions (DFIs) should work together with private sector investors to maximise impact. In 2015, a cohort of DFIs coined the phrase, in a paper by the same title, “from billions to trillions”.
One of the ideas behind it is that to achieve the UN sustainable development goals, private sector investment will need to come in alongside official development assistance.
One of the major reasons for the infrastructure backlog in Africa was not the funds available but the number of bankable projects, Vivekanandan said. By 2020, the bank wanted to unlock R100-billion annually in infrastructure investment, with only about 25% of this delivered from its own balance sheet, he said.
In this vein, the bank had established a “project preparation capability”, which would provide funding to make more projects bankable.
The value of projects approved for funding during 2017 amounted to R600-million, down from R7.6-billion in 2016. This was due to delays in the independent power producer (IPP) programme and the expansion of the Gautrain.
“Looking ahead, the project preparation division will focus on a programmatic approach in the water and energy sectors as well as in undercapacitated municipalities,” the bank said. The bank, which has assets of R86.5-billion, disbursed R12.4-billion in the year to March, down from R17.1-billion in the previous period, on the IPP programme and Gautrain delays.
It extended R4.5-billion to metropolitan cities, narrowly missing its R4.8-billion target.
The bank had faced competition from commercial banks as well as the International Finance Corporation, Vivekanandan said.
Investments of R433-million and R2.7-billion in social and economic infrastructure respectively were well below the targets of R1.2billion and R5.6-billion. — BDLive