DBSA Development Fund Overview

Mathanda Mathenjwa14 July 2006

Background of DF

• Section 21 Company

• Registered on the 21 December 2001

• Capitalized by DBSA to the tune of R510 million to date

• Estimated recapitalisation for 2006/7 is R118 million

• Operates within the borders of South Africa

Mandate

• Local Government Development

• Local Economic Development

• Community Development

Clients

• Local Government- District Municipalities- Local Government

• Provincial Government

• Utilities

• NGOs, CBOs and Communities

Support Areas

• Skills DevelopmentTraining of officials and councilors (I.e. financial management, HR, performance management, LED etc.)

• Systems DevelopmentManagement Information Systems (financial management, administration, GIS, etc.)

• Planning Aspects• Development Credit

DF Performance

• Commitments = R479 million

• Disbursements = R246 million

• Municipalities supported = 195

• Projects approved = 419

Lessons Learned

• A number of factors have been identified as constraints inhibiting service delivery:– Grant Funding alone does not necessarily result in success– Effective project management results in successful capacity

building initiatives– Classroom training is not the most effective way to build capacity of

municipal officials– Lack of coordination of programmes results in duplication of

resources– Capacity constraints occur at all stages of implementation including

preparation of MIG projects

“ As many of us are aware by now, Project Consolidate has identified serious capacity constraints in many of our

municipalities arising from a shortage of properly qualified managers, professional and technical personnel. We have

taken the necessary decisions to attend to this urgent matter”

State of the Nation Address of the President of South Africa, Thabo Mbeki,3 February 2006

“ The Development Bank of Southern Africa is currently assembling a task force of engineers and project managers,

to be named Siyenza Manje, to contribute to operational and strategic capacity in distressed municipalities, and to

accelerate the roll out of basic services”Budget Speech 2006 by the Minister of Finance, Trevor A Manuel

15 February 2006

“ We are collaborating with the Development Bank of Southern Africa (DBSA) to mobilise experts to provide professional support for programme and project implementation. They will provide hands-on technical support during all phases

of the project management cycle. We will also focus on low-capacity municipalities, especially nodal municipalities and

former cross-boundary municipalities, with a view to assisting them to develop effective service delivery plans”

Debate on the ‘State of the Nation Address’ Minister for Provincial and Local Government, Sydney Mufamadi

8 February 2006

Genesis of Siyenza Manje Initiative

• National Advisory Working Group (NAWG) identifies strategic DBSA role in project consolidate (DBSA Chair of NAWG, and serve as PCSecretariat)

• Presidential Lekgotla: President asks chair of DBSA to provide 1 of many interventions to support capacity building at municipal level

• DBSA Development Fund Board approve a dedicated project deployment task force programme (Siyenza Manje) as prompted by Government to augment and sustain the Project Consolidate thrust

Key Features of Siyenza Manje

• Ownership: Government;

• Management: DBSA Development Fund

• Coordinated Approach: Linkages & partnerships (no duplication, synergy)

• Key Context: Sustain thrusts of Project Consolidate over long term, and immediately augment local project capacity

• Intervention Character: Centralised project focused task force

• Horizon: Long term

Purpose and Composition of Task Force

• The purpose of the task force

– provide specialized, capable professional services for project development and implementation, primarily in low-capacity municipalities

– hands on, practical and project focused capacity building

• General composition of the task force

– project management– engineering/technical services– financial management / treasury services

Siyenza Manje - a Core Programme of DBSA DF(which was restructured to focus in this priority area)

• DBSA DF formed in 2001/2 with original mandate of:– to support local governments institutional capacity by providing grant

funding to enhance and improve performance

– funded by annual capitalisation from DBSA surplus

• Originally, DBSA DF provided focused institutional and human capacity building grants to complement Government grants

• DBSA DF re-structured such that Siyenza Manje accounts for 80% of DBSA DF resource allocation, and 20% for continued institutional/human capacity building grants

Siyenza Manje Roll Out

• Ninety experts will be recruited during the first year– Fixed term contracts– Phased approach– 28 young professionals– Phase 1 – 30 experts in the first quarter– Teams deployed to municipalities in May 2006

• The deployees will spend 80% of their time at the municipalities and 20% at the DBSA Development Fund

Progress (1) - Identification of Pilot Interventions

• In consultation with stakeholders, eight provinces have been identified for a pilot phase for the implementation of the Task Force

– Limpopo – Eastern Cape– Free State – KwaZulu Natal– North West – Mpumalanga– Northern Cape – Western Cape

This does not mean that the other regions will not be considered shouldthey meet the guidelines for selection

Progress (2a) - Project Location and TypeProvince Municipality Project

Eastern Cape Mnquma Supply of water to Siyandainformal settlement

Elundini Eradication of bucket systemNtabankulu Eradication of bucket system.

Northern Cape Thembelihle Hopetown bulk water supply

Kamiesberg Water supplySiyancuma Sewer reticulation

Free State Matjabeng Eradication of bucket systemPhumelela Memel sewerage oxidation dam

Warden construction of sewer

KZN Hlabisa Newsite establishment and water reticulation.

Ndaka Waterborne sewerage systemJozini Provision of water to the rural

community.Limpopo Modimolle Water reticulation

Thabazimbi Upgrading of sewerage works

Mpumalanga Govan Mbeki Sanitation and water.Ehlanzeni Water & sanitationAlbert Luthuli Water & sanitation

North West Kgetleng Financial managementMoretele InfrastructureMoses Kotane InfrastructureRustenburg Town planning

Progress (2b) - Project Location and Type

Progress (3) – Recruitment• Interviews held in March 2006• 62 candidates were interviewed• 33 candidates were given offers• 6 candidates declined• 9 Project managers• 9 technical experts• 9 financial experts• Second round interviews in June 2006• 12 additional candidates appointed• Interviews for second phase (30) scheduled for 17-19 July 2006

Progress (4) – Deployment

• Deployees introduced to municipalities from 18-30 May 2006

• Teams undertook assessments and scoping of identified projects

• Deployees to submitted business plans by 3-7 July 2006

Progress (5) Challenges

Internal:

• Business/management systems• Structure• Policies• Controls• Governance

Progress (6) Challenges

External:

• Lack of key personnel (people in acting capacity - skills transfer)• Funding gaps (project budgets - MIG)• Institutional capacity to operate and maintain (budgetary &

expertise)• Overall shortage of skills in SA (engineering)

Governance & Coordination Arrangements (1)

• Project Consolidate Strategic Partners– The Presidency– National Treasury– Department of Provincial and Local Government (dplg)– South African Local Government Association (SALGA)

• The DBSA Development Fund Board has approved the establishment of a Deployment-Sub Committee– Comprises of Fund personnel and Strategic partner representatives– Oversight of planning and operational team– Strategic– Source of knowledge– Political responsibilities

Governance & Coordination Arrangements (2)

• Technical Advisory Team

– Representation from all strategic partners and Local Government practitioners

– Advisory services

– To provide technical expertise

– Assessment of identified projects

Funding Requirements

• DBSA = R600 million

• National Treasury = R1.1 billion

Thank You