Following record disbursements of R12.7-billion in 2014, the State-owned Development Bank of Southern Africa (DBSA) plans to raise total yearly disbursements to R22-billion by 2017, with a major focus on underresourced municipalities. The bank’s previous disbursement high was R9.2-billion, set in 2013.

CEO Patrick Dlamini, who has presided over a far-reaching and painful restructuring of the organisation in recent years, said last month that the development finance institution (DFI) was also intent on becoming a leading infrastructure financier in Africa.

The Midrand-based bank only recently received a continentwide mandate, having hitherto been confined to activities within the Southern African Development Community (SADC) bloc.

Regional financing rose to R3.6-billion and the bank was currently assessing opportunities in non-SADC countries such as Ghana and Kenya.

It was still uncertain, however, whether the DBSA would play a key role as South Africa’s agent in the emerging ‘New Development Bank’, which was officially approved for establishment by the governments of Brazil, Russia, India, China and South Africa (Brics) at the sixth Brics Summit, in Fortaleza, earlier in the year.

Finance Minister Nhlanhla Nene, who is also DBSA governor, stressed that the size of the African infrastructure gap, which some estimated required yearly investments of around $100-billion to close, meant that there was no risk of competition between DFIs.

“So the introduction of the Brics bank will complement the initiatives that are currently under way [domestically]. There is going to be a lot of cooperation [needed] between our own existing institutions and the Brics bank,” Nene added.

He refused to be drawn on DBSA’s role, reaffirming only that the regional headquarters of the New Development Bank would be in Johannesburg. He added that the current focus was on preparing the first project, which the South African government believed should be an African infrastructure project.

Dlamini also stressed that the bulk of the DBSA’s immediate growth would be derived from within the borders of South Africa, with the home market expected to absorb more than 60% of its capacity for a number of years.

The bank had repositioned itself to materially increase its lending to domestic municipalities following the establishment of planning and implementation support units focusing on that sector.

These units were staffed mainly by development planners and engineers, who were able to support poorer municipalities in developing infrastructure master plans, sector plans and funding plans. “The bank assisted in moving 30 projects from planning to construction phase and 25 projects, ranging from access to water, sanitation and electricity services, have been completed.”

Total disbursements to municipalities increased 33.3% during the year to R1.7-billion, but that figure had already been exceeded during the first half of the bank’s 2015 financial year. There was a 141% rise in lending to underresourced municipalities, which increased to R815-million.

The group would also continue to participate in energy, transport and water infrastructure projects, having disbursed R6.7-billion last year for power projects alone, many of them related to the renewable-energy programme.

In the coming years, attention would be given to progressing economic infrastructure projects to bankability, which would enable commercial lenders to consider participation. Dlamini described the current dearth of bankable projects as a “market failure” that required addressing.

In the social infrastructure area, meanwhile, the DBSA was prioritising school and clinic building, as well as low-cost housing initiatives.

The bank was facilitating the implementation of the Accelerated School Infrastructure Development Programme and completed the construction of 49 schools as part of the first phase of the programme. It had subsequently been requested to assist the Department of Basic Education with the construction of a further 71 new schools in the coming two years.

During 2014, the DBSA also reported a profit of R787-million in 2013, following a loss of R825-million in the previous year.

CFO Kameshni Naidoo reported that cash generated from operations increased by 151% during the year, from R794-million to R1.9-billion.

She said the DBSA had established a solid foundation from which to pursue its growth ambitions. The group would target disbursements of R15.4-billion in the current 2015 financial year.