11DBSADBSA

RURAL DEVELOPMENT & RURAL DEVELOPMENT & URBAN RENEWALURBAN RENEWAL

DBSA PRESENTATION TO PARLIAMENTARY JOINT DBSA PRESENTATION TO PARLIAMENTARY JOINT

BUDGET COMMITTEEBUDGET COMMITTEE

2 NOVEMBER 20042 NOVEMBER 2004

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IntroductionIntroduction

• The purpose is to present DBSA perspective on rural development and urban renewal in SA.

• This is done in the context of MTBPS presented on 26 October 2004.

• MTBPS places great emphasis on infrastructure investment.

• DBSA’s mandate is focused on infrastructure development.

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OutlineOutline

• MTBPS issues• About the DBSA • Rural development & urban development

focus• DBSA intervention and support• Conclusions

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Need to Focus on Rural Development Need to Focus on Rural Development & Urban Renewal& Urban Renewal

• While 10 year reviews show consistent positive progress, there are still major challenges to improve the 2nd economy in the next decade.

• The challenges of the 2nd Economy hinge on underdevelopment of rural areas, townships, inner city and informal settlements.

• There is a need to refocus public and private investments in rural development (RD) and urban renewal (UR) - in order to build sustainable economies.

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MTBPS IssuesMTBPS Issues

• Some of the pertinent issues raised in the MTBPS include:– Large increases in future spending occurs in

welfare and social security (12,7%), telecoms and transport (9,7%) and health services (9,6%).

• TnT on areas with economic potential• Welfare and health on 2nd economy

– Shifting more resources to provincial and local government,

• where rural development and urban regeneration is being implemented.

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MTBPS Issues (cont.)MTBPS Issues (cont.)

• Integrating formal and informal sectors through:– Expanded Public Works Programme– Skills development– Land reform and agricultural support

programmes• This is a reiteration of previous statements by

government. Need for improved integration

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MTBPS Issues (cont.)MTBPS Issues (cont.)

• Municipal Infrastructure Grant to provide substantial resources for water and sanitation: – These services are still problematic in the 2nd

economy– Backlogs in sanitation are mainly in rural

provinces. • The 2005 budget is to step-up investment in roads,

dams and housing.– Revenue collection prognosis looks good to

allow this.

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MTBPS Issues (cont.)MTBPS Issues (cont.)

• Migration from rural areas to urban areas gaining momentum.– Natural phenomenon to e planned for: services in

urban areas, and empowerment in rural areas.

• Economic priorities include economic infrastructure, industrial development and land reform. – There dedicated DFI’s for each of these sectors:

DBSA, IDC and Land Bank respectively

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MTBPS Issues (cont.)MTBPS Issues (cont.)

• Tax incentives for rejuvenation if inner city, where 15 municipalities have been nominated in designated areas.

• Incentives to encourage investment in productive assets, R&D and deductibility of start-up costs.– This need to be integrated with other

interventions, e.g. Project Consolidate, presidential nodes etc.

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About the DBSA: VisionAbout the DBSA: Vision

• To further the progressive realisation of an empowered and integrated region, free of poverty, inequity and dependency.

• To be a leading change agent for socio-economic development in Southern Africa.

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About the DBSA: MissionAbout the DBSA: Mission

• To maximise our contribution to development by mobilising and providing finance and expertise and by establishing partnerships to develop infrastructure to improve the quality of life of the people of southern Africa

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About the DBSA: Triple RoleAbout the DBSA: Triple Role

• FINANCIER:– To contribute to the delivery of basic services and promote

economic growth through infrastructure funding

• ADVISOR:– To build institutional, financial technical and knowledge capacity

for development

• PARTNER:– To leverage private, public and community players in the

development process

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DBSA Perspective on RD & UR DBSA Perspective on RD & UR

• Focus of RD & UR is required on:

Areas with service backlogs; Areas that are spatially and economically

marginal, but with potential; Areas in which social exclusion continues to

limit development of the communities (people pillar of sustainable development).

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Challenges Challenges

• Need for greater common understanding of objectives of rural development & urban renewal: – Different objectives for rural development and

urban renewal in different nodes – Lack of coordination at planning level – Need focused approach across sectors and

spheres of government.

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Challenges (cont.)Challenges (cont.)

NATIONAL SPHEREISRDS & UR

PROVINCIAL SPHEREProv Dev Strategies

LOCAL SPHEREIDPS

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Challenges (cont…)Challenges (cont…)

• Budgets don’t match need & access difficult:– In the MTEB, ISRDP and UR programmes not

explicitly budgeted for by DPLG.– It is estimated that it will require about R22

billion per annum to close household income gap in the 13 rural nodes.

– Also, funds difficult to access – slow approval; matching funds from other departments not readily available.

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DBSA Interventions & DBSA Interventions & SupportSupport

DBSA is both directly and indirectly involved in RD & UR through its triple

role

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DBSA RoleDBSA Role

Financier:• The Bank finances municipalities – but limited by

risk profile and municipality’s capacity to absorb loan.

• Since 1994, approved loans and equity of R25 billion (resulting in total project value R83 billion).– No. of projects 1030– No. of households benefiting 4 million– No. of jobs created 527 000– GGP impact R63,5 billion

• Vision 2014 challenges us to redouble efforts

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DBSA RoleDBSA RolePartner:• The Bank partners and supports, inter alia, the

following:– DPLG on broad policy development, Vuna

Awards, and Project Consolidated – DPW on extended public works programme

(EPWP) in project management.– SALGA: local government capacity building

through its LGRC and LGNET.– IDT and ARC on implementation of ISRDP. – Universities through Vulindlela Academy

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DBSA RoleDBSA Role

Advisor:• Since 1994, the Bank has approved capacity

building grants of more than R100 million. • The Bank’s advisory role included technical

assistance, knowledge support and agency services.

• The DBSA Development Fund also provides capacity building grants to municipalities (including ISRDP and UR nodes).

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DBSA Role (cont.)DBSA Role (cont.)

• Following last year’s hearing,– The Bank established a Rural Development

Forum, which enables DBSA Rural Development Team to share information with partners.

– The Forum coordinates publication of • South Africa Rural Development Quarterly (SARDQ):

to provide fresh thinking on rural development issues• Rural Monitor: monthly review of what print media

reports about rural issues

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ConclusionConclusion

• The MTBPS provides, over MTEF, a good basis to extend focus on the improvement of the 2nd economy.

• This is reflected by a distinct attention to allocating more resources to infrastructure development.

• This will further enable DBSA’s effort to leverage government and other agencies to further deepen interventions in rural development and urban renewal

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Thank youThank you