The DBSA has created a Project Preparation Fund unit to provide project preparation funds for developing infrastructure projects. The unit was created to support the pipeline of DBSA’s financing divisions.
The Government of South Africa and the European Union jointly developed an infrastructure funding programme funded by the European Union for a total value of €100 million to support South Africa’s National Development Plan as well as the Regional Infrastructure Development Master Plan of SADC. DBSA has been selected to be the implementing agent for IIPSA and serve as the fund manager and Secretariat of the programme.
The PPDF facility was born out of article 26A of the Southern African Development Community Treaty. The programme was created to address the shortage in project preparation funding for infrastructure projects in the region. The funds are administered, managed and disbursed by DBSA on behalf of the SADC Secretariat and is funded by the European Union and KFW Investment Bank.
The DBSA project preparation funds are earmarked for projects which the DBSA’s financing divisions can include in their pipeline. The funds are intended to be used for the following;
* Creating an enabling environment for infrastructure projects to implemented
* Conducting pre-feasibility studies
* Conducting bankable feasibility studies
* Assistance with costs to reach financial close
These funds are provided with the view that projects prepared with these funds will be funded through DBSA’s Lending divisions.
DBSA will enter into a facility agreement with conditions stipulated.
The intended purpose of the IIPSA is to enhance sustainable economic growth and the delivery of key services affecting development in South Africa and the SADC Region. IIPSA is expected to support the implementation of the government infrastructure programme and to address the constraints to infrastructure development in South Africa and in the SADC region. The programme will provide innovative financing involving the blending of EU grants together with loans from participating Development Finance Institutions (DBSA, KFW, EIB and AFD).
IIPSA is a grant facility with the condition of a loan from one or more of the participating DFIs.
The objectives of the programme are to:
* Create a conducive environment for investment through financing the preparation of infrastructure projects. The PPDF will concentrate on those projects that will be considered as enablers of regional integration.
* Provide technical assistance for infrastructure project identification, preparation and feasibility studies with a view to making the projects bankable and attractive to investors
* A grant facility will be made available for 95% of the required amount. A 5% monetary value of the grant is required from the recipient.
Sector & Geographic Focus
The funds are limited to projects in South Africa, SADC region and select countries in the greater continent of Africa.
The sectors which the fund focusses on are;
* Energy infrastructure
* Water and Sanitation infrastructure
* Transport and Logistics infrastructure
* ICT Infrastructure
IIPSA funding is limited to South Africa and the SADC region. SADC projects have to be a trans-border project involving two or more countries in the SADC region or a national project with a demonstrable regional impact on one or more countries in the SADC Region. The sectors for which the fund is available include:
* Energy Infrastructure including:
o generation, transmission, safety and security of energy
o energy efficiency
* Transport and logistics infrastructure
* Protection of the environment;
o Water resource management, including related infrastructure.
o Maintenance of water and waste water infrastructure particularly at municipality level.
o Promotion of low carbon and cleaner industrial production, including promotion of innovative and environmentally friendly technologies.
o Promotion of climate change adaptation technologies and related infrastructure.
o Promoting integrated waste management and associated infrastructure.
* ICT infrastructure.
* Social Services and infrastructure including:
o Better access to health care and improved health services installation in urban and rural areas.
o Better education facilities, increased access to education in urban and rural areas.
o Vocational training facilities.
o Improved housing.
o Public buildings and spaces.
The funds are limited to projects within the SADC region. The projects should span over two or more SADC countries or if located in one country should facilitate and promote regional integration. The sectors for which the fund is available include:
* Transport infrastructure.
* Energy generation and transmission.
* Information and Communication Technologies.
* Water and Sanitation.
* Tourism related infrastructure.
Governance/ Approval Structure
DBSA Approval Structures
IIPSA Project Steering Committee consisting of members from the Departments of National Treasury, International Relations and Cooperation, public Enterprises and Economic Development (subject to a non-objection from the European Union).
PPDF Steering Committee consisting of members from the SADC Secretariat and the Troika of Member States (subject to ratification by the PPDF Board of Trustees)