Leveraging the balance sheet
The focus is less on a commercial rate of return, but rather a developmental impact return
In the past few years development finance institutions (DFIS) globally have been reviewing their purpose and position in an effort to facilitate development projects that are more than the sum of their parts. As a result, many DFIS are creating a more holistic strategy and as such they are seeking to create platforms for public-private partnerships.
“This is a worldwide phenomenon given the global Sustainable Development Goals (SDGS) and infrastructure needs of both developed and developing economies,” says DBSA chief risk officer Paul Currie. The goals emanating from the September 2015 UN Summit on Sustainable Development (COP21) in Paris, France, involve levels of investment in infrastructure and innovation for these to be achieved.
“Goal nine focuses specific attention on the development of quality, reliable, sustainable and resilient infrastructure and refers to the fact that by 2030 all existing infrastructure needs to be upgraded,” says Currie.
Historically, the DBSA was predominantly a loans-based bank focusing primarily on municipalities and large infrastructure projects in SA and the SADC region. In the past four years it has become involved with project preparation and project implementation, ensuring an end-to-end solution and consequently contributing significantly to the bank’s now extended value chain.
Though the DBSA has strong products and solid relationships with government and the private sector, it is cognisant of the need to leverage its balance sheet in order to meet the infrastructure needs of SA and the region as well as supporting the sustainable development goals.
The DBSA’S goal for the past few years, says Currie, has been to expand the bank’s impact beyond what its historic approach could achieve, while at the same time ensuring that both credit and operational risks are shared with coinvestors.
“We believe there is a role here for institutional investors including