Local Government Support
The local government sector is an investment area where the DBSA holds extensive expertise and we work with all three sectors of local government i.e. metros, secondary and under-resourced municipalities.
The local government sector is an investment area where the DBSA holds extensive expertise. There are 278 municipalities in South Africa and we work with all three sectors of local government i.e. metros, secondary and under-resourced municipalities. Our approach for each sector requires a customised response to the challenging economic environment as well as the capability of municipalities to deliver on their intended infrastructure projects. Municipalities play a crucial role in the economic activity of each region and infrastructure is key to unlocking this. In our strategy to support local government, we effectively aim to improve the quality of life for residents in these municipalities. Millions of residents benefit from the development and maintenance of basic household infrastructures such as water, sanitation, electricity, roads and human settlements, as well as community services.
National Treasury in collaboration with relevant stakeholders has embarked on reforming municipal borrowing strategies. In this regard, the DBSA invests in the municipal debt market, through the support and expansion in debt maturities, enhancing secondary market liquidity through expanding available issuances, and encouraging innovation in lending instruments. Furthermore, the DBSA explores municipal infrastructure bonds, municipal bond underwriting, project finance, and various contracting models as some of the ways to encourage greater private investment in municipal infrastructure investment.
A percentage of the DBSA’s profits is allocated towards a development subsidy in the form of grants and non-financial/non-lending investments. We assist under-resourced municipalities with proper municipal infrastructure plans such as master plans in water, sanitation, electricity, roads and stormwater, and infrastructure investment plans. The non-lending subsidy ensures that sustainable projects are identified, prioritised and allocated sufficient funding for the development of sustainable municipal infrastructure to accelerate service delivery. This development subsidy extends to capacity-building skills for municipal staff.
Key National Programmes
The DBSA transpires to be the implementation arm of government to drive key government initiatives. These are:
- establishment of Programme Management Units(PMU’s) in five provinces
- National Revenue Management Framework
- implementing agent for the roll out of the District Development Model(DDM)
Programme Management Units
One of the critical areas deficiency within municipalities is their capability to project manage both capital expenditure programmes and maintenance management programmes. The DBSA works to capacitate municipalities through the creation of Project/Programme Management Units (PMU), which prioritizes key infrastructure projects with needed project finance, management, governance and implementation support. The overall objective is the creation of a single spatially integrated government plan that guides strategic investment spending, project delivery across government, and forms the basis for accountability and good governance.
National Revenue Management Framework
In conjunction with National Treasury and COGTA’s, the DBSA supports the development of the Single and Integrated Revenue Management Framework (SIRMF) for local government. The Framework provides municipalities with a single point of reference that guide optimal and differentiated solutions for revenue management and contribute to improving financial sustainability of municipalities It encompasses joint structures, processes and tools to support ailing municipalities.
District Development Model
In partnership with COGTA, the DBSA manages the District Development Model. The support includes the establishment of a Programme Implementation Unit as well as the setting up of District Hubs in three pilot sites. The District Development Model’s programmatic approach is well suited to facilitating local government support to ensure accelerated infrastructure development through adequately resourced Programme Implementation units. The overall objective is the creation of a single
Non-lending Support
The development subsidy is used to strengthen the capacity of under-resourced municipalities to accelerate service delivery. The DBSA:
- supports initiatives that aim to unlock new infrastructure and developments
- supports municipalities to optimise asset performance (asset care)
- implementation support, monitoring and reporting on development results
- supports initiatives to reduce under-spending of capital infrastructure budget due to poor implementation & monitoring skills
- supports initiatives to build the technical capacity
We focus on bulk infrastructure development with emphasis:
- on underdeveloped communities in urban areas
- on improving service delivery in underdeveloped communities in urban and semi-urban areas
- improve access to basic services, community facilities, economic infrastructure, etc
DBSA and other entities are designing solutions to support the development of economic infrastructure to expand the income generation base of municipalities.