Trevor A Manuel, MP, at the DBSA annual report launch
28 August 2006
Chairperson Mr Jay Naidoo,
DBSA Directors,
Managing Director and CEO, Mr Paul Baloyi,
Dear friends:
The results of the Development Bank of Southern Africa (DBSA) once again
tells the story of an exceedingly well managed institution capable of exceeding
the targets it has set for itself both in respect of financial performance and
in respect of a number of development indicators. For this both the board and
the management are to be congratulated.
Mr Paul Baloyi is now the CEO of the DBSA. I know that he has used the time
since his appointment to good effect and that he is determined to reposition
the DBSA to be better able to meet its historic responsibilities. He and the
entire management must know that government will fully support the cultural and
strategic shifts that he is seeking to drive.
The DBSA occupies a difficult space. We need to remind ourselves that it is
one of our premier development finance institutions, it is not merely a bank,
it has to operate in those areas where the market fails. The client base of the
DBSA is primarily local government and financing its infrastructure in
particular.
The year under review has been insecure for local government; the fact of
the local government elections held on 1 March, induces that measure of
uncertainty where councils were uncertain of their ability to either undertake
new infrastructure development or to take on new debt. This will be a cyclical
feature for the DBSA which thankfully is now behind us for the next five
years.
The changes that the DBSA will have to effect include its ability to deepen
relations with its client base and to attempt to even out the cyclical nature
of its lending. In this regard, I have no doubt that the important initiatives
taken will bear fruit on the one hand there is the development fund which has
received transfers of R479 million since 2002 and in the year to 31 March
increased its disbursements of Capacity Building Grants (CBG) to R120 million
(up from R74 million and R41 million in the two preceding years). On the other
hand there is the brand new initiative called Siyenza Manje, which provides
hands-on technical expertise to municipalities in a range of disciplines. Both
of these are very significant investments designed to overturn the reality of
reduced capacity amongst municipalities. The measure of their success will not
only be in stronger municipalities but also in a strengthened partnership
between these and the DBSA. It is an investment that must bear fruit.
There is a broader context within which all of this takes place: we have a
responsibility both as government and through our development finance
institutions to ensure that democracy tangibly improves the quality of life of
the poorest South Africans. We have the Millennium Development Goals (MDGs) as
a very direct measure of our commitment and endeavours. Whilst important parts
of the MDGs deal directly with the immediate mandate of the DBSA in respect of
issues such as access to water, sanitation, clinics, schools and roads we must
accept that the mandate of the DBSA is broad enough to include the development
of social and human capital. It is in addressing these issues that an
institution such as the DBSA encounters the greatest difficulties; our
Constitution vests responsibility in elected governments in three spheres, the
DBSA is not an elected government so its enthusiasm is curtailed until there is
a call for its services, especially in the non-infrastructure and non-business
areas. Yet, we cannot pretend that we will either deliver improved local
government services or infrastructure without the necessary development of
human capital. So while we recognise the fine line separating responsibilities
we must continue to encourage the DBSA to think through the entirety of its
mandate.
A second contextual matter that we need to lean on the DBSA in respect of,
is to be the conscience of government to ensure an improvement on the built
environment. The DBSA has responded and there is already a pilot project
underway to create communal space in housing areas recently constructed. I am
mindful of just how difficult it is to return a few years after housing has
been handed over to create space that should have been provided initially but
if this were just banking we would not have attracted the staff we employ at
the DBSA. The still to be named communal space initiative will be defining of
the DBSAs role in new communities. Similarly, the initiatives now being tested
with the private sector in the delivery of tourist infrastructure in Port St
Johns is the type of project that must provide for the DBSA an active learning
process because it is so rich with opportunities for empowerment and
transformation. It will have to be expanded, replete with the applied knowledge
and additional private sector partners will have to be encouraged to join with
the DBSA.
A third matter that I raise repeatedly is the need for counter-intuitive
thinking about the lending book to ensure that the traditional appraisals of
risk are inverted to ensure that we can channel resources to areas of greatest
need. This matter has become decidedly less difficult just a few years ago
commercial banks saw the poor as a hassle not worth providing banking services
for, now we have seen that in a mere 18 months there are over 3,3 million
Mzansi account-holders. Suddenly, the pyramid has been inverted and there are
so many new possibilities. The DBSA will have to tackle this matter in relation
to municipalities and must realise the potential of its so-called âMarket
3â.
A fourth contextual issue is the transformation of Southern African
development Community (SADC). The SADC Heads of State, meeting in Summit in
Maseru, just 10 days ago strengthened their collective resolve to regional
integration. The summit emphasised the need to scale up the implementation of
the integration agenda and reiterated the centrality of the Regional Indicative
Strategic Development Programme (the RISDP). A special Ministerial Committee
was established to work with the secretariat to define a road map for
eradicating poverty and fast-track implementation and to report to an
Extraordinary Summit in October 2006. Quite obviously, we must recognise that
economic integration will not arrive either because of our commitment thereto
or simply because we know that it is the most desired step; it will have to be
painstakingly and organically delivered. There are few institutions as capable
and well positioned as the DBSA to partner with the SADC Secretariat in order
to deliver a viable economic region. This does mean that the focus of the DBSA
will shift from its primary emphasis in SADC on Private Sector Development
(PSD) to all of the elements of integration.
The period ahead under the new leadership of Mr Paul Baloyi, supported by
the new head Strategic Initiatives, Mr Gwede Mantashe, is going to be
exceedingly exciting. Their innovations need a strong, well managed institution
that is indeed what the annual report confirms that they have. For this we must
express our heartfelt appreciation to Mr Mandla Gantsho for his role in
providing this foundation. He of course continues to serve us, albeit now at
the African Development Bank (ADB).
It is appropriate too that we express our sincere appreciation to the board
of the DBSA who have become a model of corporate governance. I want to express
a special word of thanks to Mr Jay Naidoo in his capacity as Chair of the Board
and also to Professor Brian Figaji, in his capacity as Chair of the DBSA
Development Fund.
Thank you!
Issued by: National Treasury
28 August 2006
