What Is the Development Bank of Southern Africa About?

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What Is the Development Bank of Southern Africa About? What is the Development Bank of Southern Africa about? The Development Bank of Southern Africa (DBSA) To support the strategy of the DBSA, investments in was established in 1983 to perform a broad economic infrastructure assets are made within the following three development function within the homeland constitutional broad segments: dispensation that prevailed at the time. In 1994, Social transformation: Support the creation the new constitutional and economic dispensation in of sustainable living environments and alleviate South Africa lead to the transformation of the Bank’s basic services backlogs role and function. Economic stimulation: Support the growth of the economic base and employment opportunities In 1997, the DBSA was reconstituted in terms of Capacity development: Support the upliftment the Development Bank of Southern Africa Act (No. 13 of 1997) as a development finance institution. of human capital in the areas where growth and The constitution and conduct of the DBSA Board of development are constrained by lack of education Directors are primarily governed by the DBSA Act and and skills further regulated by the Public Finance Management Act (No. 1 of 1999) and the Companies Act (No. 61 of 1973). Roles Mandate Financier The DBSA’s mandate is to provide financial, technical Loans and other assistance to achieve the objects of the Bank Equity investments as provided for in section 3 of the DBSA Act, with a focus in its investment activities on infrastructure Co-funding funding broadly defined and with the object of acting Grants as a catalyst to maximise private sector access to Development expenditure opportunities in the provision of public funding. Advisor Objectives of the Bank To build institutional, financial and knowledge capacity The main objectives of the Bank are the promotion for development: of economic development and growth, human resource External training development, institutional capacity building, and Subsidised lending the support of development projects in the region. Technical assistance grants The ancillary objectives of the Bank are to assist other international, national, regional and provincial initiatives Partner in order to achieve an integrated finance system for development, and to assist national, international To leverage private, public and community stakeholders and private sectors bodies with the management of in the development process: specific funds. Co-funding Mobilise funding for clients Vision Integrator A prosperous and integrated region, progressively free To mobilise and link stakeholders, resources and initiatives of poverty and dependency. for sustainable development outcomes. Mission Implementer To advance development impact in the region by To originate and facilitate key interventions for building expanding access to development finance and effectively capacity and providing development solutions: integrating and implementing sustainable development. Project implementation in collaboration with clients (Siyenza Manje programme) Strategic objectives External training Promote broad-based economic growth, job creation, cooperation, integration and prosperity Build human and institutional capacity Co-deliver social and economic infrastructure Serve as a centre of excellence for development Business and financial financing, effectiveness and good governance Engender sustainability, externally and internally performance overview Business performance overview 5-year 2009/10 2008/09 2007/08 2006/07 2005/06 average Total capital cost of approvals (DBSA and co-funders) (R million)1 49 093 47 158 88 982 34 212 52 176 22 939 South Africa 37 029 22 151 73 334 28 979 40 189 20 491 Other countries 12 065 25 007 15 648 5 233 11 987 2 449 Total DBSA contribution to approvals (R million)1 12 513 15 000 20 480 10 767 8 265 8 052 % of total capital cost funded by others 72,5 68,1 77,0 68,5 84,2 64,9 Average value per approval (R million) 78,2 110,1 87,1 87,5 50,7 55,5 Number of investment approvals in period 161 137 235 123 163 145 Disbursements (R million) 6 112 8 257 9 306 6 160 3 703 3 077 Technical assistance grants (R million) 52,3 67,5 82,5 46,3 32,1 33,0 Number of employees (excluding contractors, etc.) 577 680 608 578 514 506 Net contribution per employee to disbursements (R million) 10,3 12,2 15,3 10,7 7,2 6,1 % of employment equity managers at year-end 74,2 74,6 76,9 74,0 77,1 68,4 Impact on employment (thousands of jobs)2 26,2 31,6 31,2 32,8 19,0 16,4 Impact on GDP (R million)3 5 066 6 944 7 083 5 121 3 052 3 128 1. Excludes technical assistance grants and terminations. 2. Based on the DBSA’s disbursements within South Africa only. 3. Based on the DBSA’s disbursements within South Africa only, at constant 2009/10 prices. Exchange rates On 31 March 2010, the R/US$ exchange rate was 7,265 and the R/€ rate was 9,833. Financial year The financial year of the Development Bank is from 1 April to 31 March. Unless otherwise indicated, references to a combined year, for instance 2009/10, are to the financial year ended 31 March. Financial performance overview 5-year 2009/10 2008/09 2007/08 2006/07 2005/06 average Financial position (R million) Cash and cash equivalents 1 968 2 707 2 475 2 314 890 1 454 Financial market assets 5 539 5 521 5 321 5 078 5 217 6 556 Investment in development activities1 26 555 36 221 31 997 25 330 21 223 18 003 Other assets 553 695 589 525 548 406 Total assets 34 614 45 144 40 382 33 246 27 878 26 419 Financial market liabilities2 18 129 26 327 22 405 16 781 12 667 12 467 Other liabilities 752 927 741 686 673 733 Total liabilities 18 881 27 254 23 146 17 466 13 340 13 200 Total equity 15 733 17 890 17 236 15 780 14 538 13 219 Financial performance (R million) Interest on development loans 2 384 3 077 2 784 2 312 1 982 1 763 Interest on investments 557 525 677* 542 564 477 Interest expense 1 462 1 971 1 705 1 338 1 243 1 054 Net interest income 1 478 1 631 1 756* 1 516 1 303 1 186 Operating income3 1 612 1 767 1 857* 1 643 1 492 1 301 Operating expense4 581 716 669 556 504 458 Profit for the year (before transfer to Development Fund) 1 210 963 1 586 1 293 1 283 928 Financial ratios (%) Total capital and reserves to loan ratio 65,8 54,3 58,5 67,8 72,0 76,4 Long-term debt to equity ratio 114,2 148,5 131,3 107,6 88,3 95,3 Cash and cash equivalents to total assets 5,6 6,0 6,1 7,0 3,2 5,5 Total capital and reserves to assets 46,4 39,6 42,7 47,5 52,1 50,0 Financial market liabilities to investment in development activities2 67,6 72,7 70,0 66,2 59,7 69,2 Non-performing book debt as a % of total book debt 5,2 4,9 5,4 5,2 4,9 5,4 Non-performing arrears as a % of total book debt 2,3 2,3 2,2 2,1 2,3 2,5 Average return on equity 8,0 5,5 9,6 8,5 9,2 7,4 Average return on assets 3,8 2,3 4,3 4,2 4,7 3,6 Operating costs to income 35,9 40,5 36,0* 33,8 33,8 35,2 Interest cover (times) 2,0 1,8 2,0 2,1 2,0 2,1 For a discussion of the financial results, see the financial and development investment overview on pages 44 to 51. 1. Development activities include development loans and equity investments. 2. Financial market liabilities comprise medium- to long-term funding debt securities, medium- to long-term funding lines of credit, funding under repurchase agreements and derivative assets held for risk management. 3. Operating income excludes net foreign exchange gain/(loss), net gain from financial assets and liabilities, and impairments. 4. Operating expense comprises personnel expenses, general and administration expenses, and depreciation. * Prior year restated for change in interest rate swap disclosure. Contents Abbreviations . 2 Governor’s foreword . 4 Board of Directors . 8 Chairman’s report . 14 Group executive management . 18 Organisational structure . 22 Chief Executive Officer’s report . 24 Macroeconomic overview . 28 Sustainability overview Environmental report . 32 Social report . 35 Development impact overview . 40 Financial and development investment overview . 44 Treasury overview . 52 Operations overview South Africa Operations . 56 International Division . 64 Development planning overview . 72 Governance and management overview Corporate governance . 76 Human capital and technology . 82 Risk management overview . 86 Annual financial statements . 91 ISSN 1728-3213 Development Bank of Southern Africa Annual Report 2009/10 1 Abbreviations AFD Agence Française de Développement BSC Balanced Scorecard CoGTA Department of Cooperative Governance and Traditional Affairs COMESA Common Market for Eastern and Southern Africa CPI consumer price index DBSA Development Bank of Southern Africa Limited DFID Department for International Development DRC Democratic Republic of Congo EAC East African Community EIB European Investment Bank GDP gross domestic product GIS geographic information system IAIA-SA International Association for Impact Assessment (South Africa) ICT information and communication technology KfW Kreditanstalt für Wiederaufbau MIG Municipal Infrastructure Grant MIIF Municipal Infrastructure Investment Framework MSFM Municipal Services Finance Model PetroSA Petroleum, Oil and Gas Corporation of South Africa PFMA Public Finance Management Act PPFS Project Preparation and Feasibility Study RERA Regional Electricity Regulators Association of Southern Africa SADC Southern African Development Community SAM social accounting matrix SAPP Southern African Power Pool TIP Targeted Infrastructure Programme UNEP FI United Nations Environment Programme Finance Initiative Development Bank of Southern Africa 2 Annual Report 2009/10 Increased development investment despite the tough economic conditions Development Bank of Southern Africa Annual Report 2009/10 3 Governor’s foreword “I have challenged the Bank to develop scalable green energy programs to assist Government in meeting its targets on carbon reduction.
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