DBSA disburses R4.5 billion in loans to South African metros
The Development Bank of Southern Africa (DBSA) announced the financing of a R3 billion loan to City of Johannesburg (COJ) and R1.5 billion to City of Tshwane (COT).
The development loans are part of DBSA’s support to metros and municipalities with a track record of good corporate governance and financial management as reflected in both their internal credit rating, audit outcomes and repayment profile.
The disbursement of these loans demonstrates the DBSA’s commitment to working with metros and other municipalities across the country, to provide much needed services to residents and visitors to our cities, towns and rural areas. The funding is targeted towards rolling out large-scale infrastructure programmes to accelerate service delivery to communities by addressing backlogs, particularly in townships, rehabilitate infrastructure and invest in growth supporting and revenue generating infrastructure. These initiatives include the construction and upgrade of electrical, water, sanitation, refuse, road, storm water and human settlements infrastructure projects, addressing service delivery and ageing infrastructure in the respective metros.
The loans will be repaid over a period of approximately 15 - 20 years. The DBSA deploys a rigorous committee-based decision and approval making structures prior to any disbursements and takes into consideration any adverse market and social events which may impact the administration of the loans.
The financial support comes at a time when critical infrastructure must be urgently rolled out to help address the economic and social challenges exacerbated by the COVID-19 pandemic. “The DBSA is stepping in to plug market deficiencies as other infrastructure lenders and investors are pulling out of massive capital programmes due to market uncertainty. The funding will go a long a way in cushioning the blows and ensuring that municipalities are not interrupted in delivering much needed support to the people of South Africa,” said Tshepo Ntsimane, Head of Metros at the DBSA.
“Both City of Johannesburg and City of Tshwane have demonstrated the capability to service large capital expenditure loans and have the financial, technical and operational resources to implement capital projects. Preliminary development impact analysis conducted by the DBSA team estimates that from these loans, at least 10,000 jobs will be created and about 1,700 youths will become part of the massive infrastructure development programmes in Gauteng,” Ntsimane added.
Municipality support such as this, along with the DBSA’s response to the COVID-19 pandemic augment critical infrastructure services that strengthens the state and state entities including, municipalities and local government structures. “Earlier this month, we announced a R150 million COVID-19 response programme that is assisting seven provinces and 25 districts, bolstering government and private sector initiatives as they fight the pandemic”, said Mohan Vivekanandan Group Executive: Client Coverage at the DBSA.
The DBSA’s mandate is to drive economic growth and social development through infrastructure development. As at September 2019 the DBSA recorded total assets of ZAR100 billion. Around 70% of these assets are concentrated in South Africa and the remainder is invested in the wider Sub-Saharan Africa region, particularly Zambia, Angola, Mozambique and Ghana.