dbsa corporate performance results 2006/7 jay naidoo, chairman, dbsa board of directors paul baloyi,...
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DBSA Corporate Performance Results
2006/7
Jay Naidoo, Chairman, DBSA Board of Directors
Paul Baloyi, Managing Director & Chief Executive
DBSA Executive Team Members
National Council of Provinces
Cape Town
9 October 2007
2
Evolution of the DBSA Engagement Model
Appraise
Finance Procure Identify
Operate DirectImpact
OUTCOME
ENTRY Point
Range
EXIT Point
Range
Service Delivery
Monitor Building
1 2 5 63 4
CommercialBank
Conventional DevelopmentBank
Vision 2014 DBSA Development Bank Model
Utility, SOE, MunicipalityCooperative, Company
Dev Planning,
Mobilisation Partnerships Facilitation
PRE-PROJECT
3
Strategically, the organisation re-focused & re-positioned:
Hands-on re-positioning of the DF through Siyenza Manje; Reformed Strategic Performance Framework (BSC); Expansion of sustainable communities projects; Expanded and deeper focus on markets 2 & 3; More strategic approach to market 1 in line with NSDP; Expanded regional integration thrusts in line with NEPAD &
new thrust of SADC Ministers of Finance; Revised research agenda; New partnerships and ventures; New risk management architecture; New human capital framework
Corporate Performance in 2006/7 was strong in both strategic and operational terms
Re-positioned for deeper development impact
& increased capacity for excellence & sustainability
4
Repositioning of the DBSA DF (1)
Internally, the DBSA DF has been repositioned in line with the New Hands on Implementation Approach and Focus on Siyenza Manje:
The DBSA DF’s structures and systems were reviewed and largely re-designed in line with its new hands-on approach, to enable rigorous implementation of the Siyenza Manje programme. This has included the establishment of a project management office and the development of new processes & reporting formats;
The DBSA DF Board also reviewed the structure of the Development Fund Board and recommended discontinuation of the Board sub committee in order to expedite the approval of deployment processes and business plans.
5
Re-positioning of the DBSA DF (2)
Externally, the DBSA DF has repositioned itself to address bottlenecks, synergies and reach over the longer term:
The Development Fund is deploying resources to national departments (DWAF & DPLG) to address bottlenecks affecting the implementation of Siyenza Manje Programme and enable/accelerate overall project implementation;
Introduction of a shared service approach to harness efficiencies in deployment and to accelerate support at municipal and district levels through;
Discussions with National Treasury on options to upscale Siyenza Manje.
6
DBSA DF Operational Performance, 2006/7
The DF focused on key development output and impact deliverables
Exceeded Targets (Substantially)- grants approvals to market 3 municipalities 20.3/14- disbursements 67m/78m, post termination of 48 m. non-disbursing grants- # of case studies 11/9- # of municipalities supported (86/20)- # of projects completed 97/30- % of operational expenditure 54m/101m
Achieved Targets Partial Achievement- - revised policies & procedures - funds leveraged (42%/50)- - aligned performance plans - # of experts deployed 87/90- - statutory reporting (AR + IR) - marketing road shows- - partnerships strengthened - # of project completion reports 10/30- - publication of evaluation report - turn around time 14/6
- # of staff trained 12/15- # of innovative ventures 0/1
Key DevelopmentImpact Indicators
MostlyInternal House
Keeping
7
1.2 billion of Government’s municipal infrastructure grants unlocked;
471 infrastructure projects under implementation;
170,000 households connected to water;
120, 000 households upgraded with sanitation facilities;
On the Ground Development Impact of DBSA DF Operations
8
Reformed Scorecards were completed in line with the enhanced V2014 Strategy & New Divisional Strategies
25 corporate measures of which 10 are new, 2 are improved and 13 existing:
New KPIs introduced to drive execution of the sharpened strategy, of which the following are some highlights : R value of MIGs implemented into projects, due to Bank’s interventions; # of new projects originated by the DBSA; # of new financial products/instruments developed
(securitization, municipal bonds & growth fund) % of backlog commitments from the previous two years that were
converted to disbursements in the current year; external client satisfaction with Bank’s delivery on its major capacity
building initiatives; # of lessons learnt, case studies and models approved through KSC; # of project managers appointed, trained by DBSA DF & deployed; non performing book debt as a % of total book debt
9
The Bank had 12 targets in the KEY dimension, accounting for 80% of total performance
All 12 targets were achieved (25%) or exceeded (75%) to varying degrees:
Exceeded (Exceptional) Exceeded (Moderate)Target (9 @ 3.6 & above) Target (1 @ 3.1 – 3.5) Approvals - Disbursements. BEE investment financing. Approved projects Capacity building. Achieved Target (2 @ 3) External training. - Research agenda. Cost of new debt. - Internal staff training. Cost to income. Turn around time. Innovative ventures.
10
2005/6 2006/7
Jobs created 17,100 25 000
Low income households 400 million 500 million
benefiting from Bank’s
investments
GDP contribution 2.0 billion 2.3 billion
Selected Development Impact of DBSA Operations (disbursements)
11
16% increase on the total number of new projects approved in RSA, with focus on MKTS 2 & 3
# OF PROJECTS APPROVED BY MARKET SEGMENTS , EDUICATION & UTILITIES:RSA only 2003/04- 2006/07
0
25
50
75
100
125
150
2003/2004 1 37 19 16 2 3 0 78
2004/2005 8 41 14 20 7 7 0 97
2005/2006 6 38 18 25 16 7 19 129
2006/2007 5 41 32 25 8 17 20 148
Market 1 Market 2 Market 3 Education Utilities Other PSI in RSA Total
Continuing trend in increase of number of new approved projects for markets 2 & 3
Totals
12
Sustained the step-up in previous year’s jump in approvals
Figure 2: Total Value of Loan & Equity Approvals : Six-Year Trend Analysis (Rmil)
R 0
R 2,000
R 4,000
R 6,000
R 8,000
R 10,000
2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007
Total Loan &Equity Approvals
2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007
Total: R 3,151 R 3,833 R 3,348 R 3,947 R 8,052 R 8,265
Average:
Table 2: Total Loan & Equity - Six-Year Trend Analysis (Rbn)
R 3,570 R 8,159
Total R value of approvals in 2006/7:Total: R8,3bil.
RSA: R5,4bil (65.5%)
SADC: R2,9bil (34.5%)
But only 2.6% growth in 2006/7
8.05
13
Large jump in share of inter-country/regional integration projects (0% in 2005/6)
38%
12%4%
1%
1%
1%
9%
34%
South Africa
Botswana
Namibia
Malawi
Mauritius
Madagascar
Zambia
Multi-Region
14
Eastern Cape “Hotspot”Province Moves into Top 3 (from 5th last year)
29%
43%
9%
5%
2%
2%
6%
2%
2%
Kw a-Zulu-Natal
Gauteng
Eastern Cape
Western Cape
Free State
North West
Mpumalanga
Northern Cape
Limpopo
15
Share of Empowerment Approvals Rises
share of empowerment approvals rises to 38% of total loans and equity in RSA, up from 31% in 2005/6;
23% increase on previous year’s level.
16
Bank ramps up investment in project preparation, feasibility etc to unlock investment, growth & development
Technical Assistance Grants - Six-Year Trend Analysis
R 0
R 5,000,000
R 10,000,000
R 15,000,000
R 20,000,000
R 25,000,000
R 30,000,000
R 35,000,000
R 40,000,000
R 45,000,000
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
TechnicalAssistanceGrants
TA Grants in 2006/7R42,1mil.44% above target
17
Jump in growth in disbursements, raising public & private investment in infrastructure & economic development
Total R value (Rmils) of Disbursements : Six-Year Trend Analysis
R 0
R 500
R 1,000
R 1,500
R 2,000
R 2,500
R 3,000
R 3,500
R 4,000
2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007
Disbursements
2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007
R 1,781 R 3,661 R 2,729 R 2,999 R 3,077 R 3,702
Total R value:Total: R3,7 billionRSA: R2,7billion (72.5%)SADC: R1,0 billion (27.5%)
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Meaningful country distribution of DBSA disbursements
Country Rvalue %
South Africa (SA Ops + PSI) R 2,683,197,251 72.5%
Angola R 129,697,958 3.5%
Mauritius R 40,537,060 1.1%
Mozambique R 56,318,728 1.5%
Swaziland R 69,583,014 1.9%
Tanzania R 210,572,439 5.7%
Uganda R 57,066,060 1.5%
Zambia R 305,928,053 8.3%
Multi-Region R 149,897,881 4.0%
R 3,702,798,444 100.0%
New, strategicmarket
Investing in good performers
Strategic focus On integration, multi-country projects
Up from 4%
Up from 0%
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Social infrastructure and water get lion’s share of DBSA disbursements in RSA
1% 4%
6%
0%3%
2%
12%
29%
39%
1%1% 2% 0%
0%
Agriculture
Manufacturing
Tourism
Education
Energy
Communications
Sanitation
Roads & Drainage
Water
Transportation
Health
Housing
Community Facilities
Capacity Building(Research, Planningetc)
Other( fund & entrepreneurial)
20
Official launch of Vulindlela 27 June 2006;
Target to train 400 external delegates;
Achieved 489 external delegates;
86% external delegate satisfaction level with Vulindlela courses;
Partnerships with DPLG, SALGA and LGSETA for RSA and JIPSA for SADC.
Non-DBSA Officials and Managers Trained
21
Partnerships & Leverage Through Co-Financing
17% improvement on leverage (excluding Gautrain Project):
2006/2007 = 1 : 2.57 (1: 5. with Gautrain Project)
2005/2006 = 1 : 2.2
22
Operating costs to income ration (excluding TA & PRMB):6-Year Trend
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2002 2003 2004 2005 2006 2007
Operating costs(excluding TA andPRMB) to incomeratio:
Bank’s achievements attained with cost-efficiency
23
Bank’s strong performance not achieved at the expense of financial sustainability
interest on development loans
operating income
surplus growthfaster than
interest expense
Operating expense growing relatively slowly & controlled
24
Assets grew steadily over the past year, by 5.5 % to 27.95 bn
Balance sheet summary
25
Growth in Development Investments
Short term & liquid financial assets give way to development
investments
Return on Assets: 4.7% (up from 3.5)
Return on ShareholdersFunds: 8.7% (up from 7%)
26
The overall result is that performance in 2006/7 has been strong, exceeding that of the previous three years
DBSA CORPORATE PERFORMANCE: FIVE YEAR TREND
22.22.42.62.8
33.23.43.63.8
4
Score 3.6 3.2 3.28 3.25 3.6
2002/2003 2003/2004 2004/2005 2005/2006 2006/2007
27
New Regional/Local Economic Development Fund Concept
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SA Operations
Infrastructure Finance to SM Munis, incidental - subject to debt absorptive capacity freed up by capacity deployment/building
SA Operations
Infrastructure Finance to SM Munis, incidental - subject to debt absorptive capacity freed up by capacity deployment/building
Relevance of Development Fund interventions … 1Siyenza Manje – Phase I - Adoption
Reality
•Skills scarcity •Training/capacity building only incidental•Capacity constraints/bottlenecks extend to government departments•Munis’ debt absorption capacity limited by poor economic bases•Gaps in economic infrastructure development – curtailing real poverty reduction
Reality
•Skills scarcity •Training/capacity building only incidental•Capacity constraints/bottlenecks extend to government departments•Munis’ debt absorption capacity limited by poor economic bases•Gaps in economic infrastructure development – curtailing real poverty reduction
Assumptions
That munis’ debt absorption capacity will improve as human capacity constraints are addressed
Assumptions
That munis’ debt absorption capacity will improve as human capacity constraints are addressed
Siyenza Manje
Purely Capacity Deployment
1. Placement of Specialists
2. Systems3. Training/Capacity
Building
1. Placement of Specialists
2. Systems3. Training/Capacity
Building
Assumptions
That MIGs will be unlocked and processed
Assumptions
That MIGs will be unlocked and processed
12 3
29
SA OperationsFinancing complementary –
targeted concessionary funding (TIP)
SA OperationsFinancing complementary –
targeted concessionary funding (TIP)
•Vulindlela Academy•Training/Capacity Building
•Knowledge Management Cluster
•Advisory services•Research
•Risk Management•Human Capital
•Vulindlela Academy•Training/Capacity Building
•Knowledge Management Cluster
•Advisory services•Research
•Risk Management•Human Capital
Siyenza Manje
•Capacity building•Targeted risk interventions•Contracted
institutionalised expertise to
capture scarce skills
(Project management
expertise)
Siyenza Manje
•Capacity building•Targeted risk interventions•Contracted
institutionalised expertise to
capture scarce skills
(Project management
expertise)
•Closer collaboration
between DF & Bank Divisions
•Common/joint targets between SAOPS & SM –
eliminate funding gaps
•Closer collaboration
between DF & Bank Divisions
•Common/joint targets between SAOPS & SM –
eliminate funding gaps
MIGS now specified targetsMIGS now specified targets
DWAF, DPLG co-optedDWAF, DPLG co-opted
Relevance of Development Fund interventions … 2Siyenza Manje – Phase II - Enhancement
……This framework is being institutionalised in current operations ….
30
The Instrument Outlined
31
The Next Step – Creating Sustainable Economic Development
Basic Infrastructure
Basic Infrastructure
Social Infrastructure
(Affordable housing)
Social Infrastructure
(Affordable housing)
Economic infrastructure
(e.g. roads, power, telecoms,
industrial waste and water)
Economic infrastructure
(e.g. roads, power, telecoms,
industrial waste and water)
Business development
(Commercial and Industrial)
Business development
(Commercial and Industrial)M
IGS
Fu
nd
ing
Ga
ps
Primary Capital –
Government
Secondary –
DBSA
concessionary
funds
Min
ing/
Pen
sion
bac
ked
guar
ante
es
Intern
ation
al DF
I’s –
Co
ncessio
nary fu
nd
s
Quasi-equity/ sub/mez- debt
Private sector capital
Sen
ior/
sub
-deb
t
Com
mer
cial
term
s
Funding mix
32
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Thank You