How funding towards critical sectors encourages economic development in SA

The South African economy has been in crisis mode for a couple of years now. In 2020, the country entered a severe state of recession, where the gross domestic product (GDP) fell by just over 16.4% between the first and second quarter of the year. 

According to StatsSA, the second quarter of 2020 experienced the biggest fall in GDP since 1960, which is far steeper than the annualised 8,2% decline in the fourth quarter of 1982.

This data indicates an urgent need for economic development to rebuild the South African economy and lead it to a healthier, better position on the global market. However, one of the key factors affecting economic development in South Africa is a lack of funding. 

The availability of funding would ensure that the economic future of South Africa is healthy and strong enough to withstand any further challenges. 

Why is funding critical?

Funding makes sustainable infrastructure development and maintenance possible. Infrastructure is key in unlocking inclusive economic growth for emerging economies such as in South Africa. Adequate infrastructure is also pivotal to achieving sustainable development goals that aim to reduce unemployment, poverty and inequality. When addressed properly, it can guarantee prosperity for the country and all citizens who live in it. 

For example, there are critical sectors that require economic development in South Africa. These sectors, education, health, transport, energy, ICT, water and sanitation, directly impact the state of the economy. When funding is channelled towards the development of infrastructure in these sectors, it opens up growth opportunities.

How DBSA solves the funding challenge

As the Development Bank of Southern Africa (DBSA), our mandate is to accelerate inclusive development on the African continent by expanding access to development finance. Once we acquire funding through fund management and infrastructure fund, we use it to implement integrated and sustainable infrastructure developments for the above-mentioned sectors. 

Below, we’ll provide a brief overview of how our work impacts these sectors. 

Education sector

The Bank seeks funding for infrastructure projects in the education sector through public and private-led programmes. These include the Student Housing Infrastructure Programme, Accelerated Schools Infrastructure Delivery Initiative and Sanitation Appropriate for Education. Together, these programmes ensure that the infrastructure needs of this sector are met. 

Health sector

DBSA supports public and private infrastructure projects that align with the needs, policies and goals of the Department of Health. For the health sector, we help facilitate infrastructure projects that aim to improve the services of public and private health and medical care. Thus far, we have successfully implemented beds in priority hospitals across the country.

Transport sector

Our key priority within this sector is pursuing infrastructure investment for projects aimed at the development of bridges, roads, bus stations, railways, terminals, airports, seaports, border ports and more. Doing this ensures that the transport sector encourages cross-border trades and, ultimately, continues to contribute to the country’s socio-economic development. 

Energy sector

Our work within the energy sector supports the development and funding of various technologies, energy generation, transmission and distribution of the green economy. As a leading financier of renewable energy, we are also committed to supporting a just energy transition in Africa.

ICT sector

The Information and Communication Technology (ICT) sector plays a huge role in stimulating job creation and driving the distribution of products and services necessary for daily operations. The Bank seeks investments to be used for the development of ICT infrastructure that improves connectivity in Africa. 

Water and Sanitation sector

DBSA offers a range of financial and non-financial solutions for the Water and Sanitation sector that address South Africa’s infrastructure water and sanitation challenges. We do this through programmes aimed at providing access to sufficient, clean and safe water and sanitation required for public health and agricultural purposes. 

Local government sector

The local government sector is an investment area where we work with three sectors of local government, i.e. metros, secondary and under-resourced municipalities. We offer customised funding solutions aimed at developing infrastructure that these municipalities need to provide sufficient services to citizens. 

Final thoughts

While the current state of the South African economy is not where it should be, improvements can be made to ensure that it reaches where it needs to be. The success of this relies heavily on the development of the above sectors. That also depends on the investments that become available. The DBSA continuously works to ensure that funding and infrastructure development becomes a reality.