The State-owned Development Bank of Southern Africa (DBSA) has dismissed suggestions that it is “bleeding” core skills as it moves ahead with a far-reaching restructuring exercise, which will result in it shedding nearly half of its 811 employees over the coming months.
CEO Patrick Dlamini also stressed on Monday that he was in ongoing communication with Finance Minister Pravin Gordhan and the National Treasury, which remained supportive of the restructuring programme and was fully aware that it would lead to some retrenchments.
National Treasury spokesperson Jabulani Sikhakhane confirmed with Engineering News Online that the "Minister of Finance and the National Treasury are supportive of the DBSA’s restructuring", and that the bank had been mandated to "position itself to play a major role in financing strategic infrastructure projects whilst achieving long-term financial sustainability".
"Restructuring is part of the process to ensure that the DBSA returns to its core mandate, which is lending for infrastructure projects with maximum socioeconomic impact in line with with the National Development Plan priorities," Sikhakhane added.
In his 2013 Budget, Gordhan committed a further R7.9-billion to recapitalise the DBSA over the coming three years, which had set a target of increasing its loan book to R91-billion, from R45-billion, over the coming five years.
An initial amount of R2.4-billion would be injected during 2013/14, followed by R2.5-billion and R3-billion in 2014/15 and 2015/16 respectively.
Sikhakhane also reported that a process was under way to extend the mandate of the DBSA beyond Southern Africa to the rest of the continent.
It was confirmed that a total of 161 executives and managers had already taken voluntary retrenchment and/or early retirement packages, with 121 of those having already departed the bank – the remaining employees would leave by the end of April.
However, the DBSA had also initiated a process with affected non-management-level employees, which was being facilitated by the Commission for Conciliation, Mediation and Adjudication, which should be completed by the end of May.
Overall, the restructured bank expected to retain around 450 employees by the end of the process, but Dlamini stressed that only about 60 people were expected to face actual retrenchment, with the majority opting for a package. Nevertheless, the restructuring, which was initiated in late 2012, had been “painful” and had caused some internal unhappiness.
Dlamini said the organisation overhaul was deemed to be necessary, as an imbalance had arisen between those employees engaged in client-facing operations and those who were focused on internal services. About 50% of all employees had been found to be engaged in non-revenue-generating activities.
Under the new structure, the number of executives reporting to the CEO had been trimmed from 14 to seven. The new executive team comprised a CFO, Kameshni Naidoo; and executives for infrastructure financing (South Africa), TP Nchocho; infrastructure financing (Rest of Africa), Moe Shaik; operational financing, Michael Hillary; corporate services, Dolores Mashishi; risk services, Paul Currie; and infrastructure delivery, Sinazo Sibisi.
Nchocho stressed that his unit, which had approved infrastructure financing of R9.5-billion last year and was targeting approvals of R11-billion in 2013/14, had not lost “core skills” and had also incorporated key research and sector specialist capacity that previously resided within the DBSA’s development planning unit.
Therefore, he was confident in the DBSA’s ability to expand its activities in line with the focus areas of the new growth strategy, which emphasised increased lending into economic and social infrastructure sectors, including into the State-owned company (SoC) market.
However, Dlamini said the restructuring would be followed up with a capacity-building plan to deal with particular areas of skills constraints, such as in the areas of credit and risk services, investment banking and legal services. It would also seek to more fully integrate its sector specialists in transport, energy and water into its transaction activities.
Besides the SoCs, the DBSA would continue to play a leading role in the municipal infrastructure sector and in overseeing the Jobs Fund and the Green Fund. It would also play a role in supporting government’s plans to accelerate the roll-out of new schools and healthcare facilities.
Dlamini also stressed that the opportunities in the rest of Africa would receive priority attention, particularly given that government had identified infrastructure development as critical to bolstering intra-regional trade and investment.
Nevertheless, there is still concern that the restructuring programme was “decimating” the DBSA’s skills base, with rumours abounding about Gordhan’s unhappiness with a process that was reportedly designed by Bain & Company.
Trade union Solidarity has been the most vocal in its criticism and has called on the Finance Minister to intervene to prevent DBSA’s leaders from implementing the restructuring plan.
Reports have also emerged from internal sources suggesting that the DBSA was losing key executives and managers, which would make it impossible for it to deliver on its growth mandated.
Dlamini dismissed these “rumours”, arguing that the DBSA had retained the leadership, the skills and the capacity to meet the growth mandate it had been given. Nchocho added that there had been “no bleeding of the core skills of the organisation”.