KfW, DBSA renew MoU

13th February 2020 By: Tasneem Bulbulia - Creamer Media Reporter

German development bank KfW has renewed its memorandum of understanding (MoU) with development finance institution, the Development Bank of Southern Africa (DBSA), to continue their successful collaboration on the financing and implementation of programmes.

The signing of the MoU took place on Thursday, at KfW's annual New Year’s reception, in Pretoria.

“2019 was another successful year of cooperation between the DBSA and KfW. This has been a trusted partnership that spans more than two decades.

“As joint members of the International Development Finance Club, the two institutions will continue to cooperate and support the region’s transition to a low-carbon future and economic growth through the development of infrastructure,” said KfW Southern Africa director Dr Thomas Duve.

The DBSA and KfW recently also signed a $100-million, or about R1.4-billion, credit line for key infrastructure projects.

Duve on Thursday said this was the largest transaction between the two institutions and would enable the DBSA to support the construction of the standard gauge railway in Tanzania.

According to Duve, a key project that is being implemented by the DBSA is the Southern African Development Community (SADC) Regional Fund for Water Infrastructure and Basic Sanitation, which addresses two key challenges in the region.

“Water supply in Southern Africa is unequally distributed, with 70% of water resources shared between a number of different countries. Transboundary water management is crucial for peaceful development of the region. Therefore, regional coordination must be established and strengthened.”

On behalf of the German government, KfW is providing €15-million in grant funding for the SADC Regional Fund for Water and Basic Sanitation project.

“The productive partnership on this programme enables financing of regional priority investment to develop regional water and sanitation infrastructure.

“At the same time, the cooperation of SADC member States and their joint water management is strengthened, as well as the SADC Secretariat as the coordinator among them. The overarching common goal is the improvement of economic and political regional integration in the SADC region,” Duve pointed out.

There are two major infrastructure projects that fall under this project, with the first being the Kazungula Water Supply project in Zambia. This is expected to benefit about 12 500 people by 2024 and includes a new cross-border bridge being built over the Zambezi river, which will connect Zambia and Botswana, opening a regional trade corridor.

The second project is the Lomahasha/Namaacha Cross Border Water Supply project between Mozambique and eSwatini, which will see the construction of rising mains, pumping stations and a reservoir in border towns.

This SADC Regional Fund was launched in 2012 and will be completed in two phases by 2023.

The SADC Project Preparation Development Facility (PPDF) is another key programme to which the KfW has committed €24.3-million in grant financing.

Implemented by the DBSA, the PPDF is aimed at creating a conducive investment environment for the SADC region. It supports projects that contribute to regional integration and provides technical assistance for infrastructure project identification, preparation and feasibility studies with a view to making the projects bankable and attractive to investors.

Targeted sectors span energy, water and sanitation, transport, telecommunications and tourism infrastructure.

Funding is limited to projects within the SADC region that span two or more countries. If located in one country, projects must facilitate and promote regional integration.

This project began in 2011 and extends to 2022 with the possibility of an extension beyond that.

The first phase is valued at €4.8-million, the second at €6-million and the third at €13.5-million.