Johannesburg, 3 August 2023 – Today, the Development Bank of Southern Africa (DBSA) announced its highest record profits to date, of approximately R5.2bn for the 2022-2023 financial year. The Bank’s commitment to sustainable development across the region has yielded remarkable fiscal performance, closing the year off with a strong financial position.
Net Profit: The DBSA achieved an impressive 36% net profit increase from R3.8bn in the 2021-2022 financial year, to R5.2bn. Of the total Net Profit, sustainable earnings amounted to R4.2bn, while net foreign exchange gains amounted to R860m owing to the significant depreciation of the Rand. A critical contributor to this impressive financial performance is a solid net interest generated from the Bank’s loan book. Further, the Bank continues to optimally manage the costs as evidenced by cost income ratio that remains low and unchanged at 24% when compared to the prior year. Given the global and local economic climate, this achievement is testament of the Bank’s institutional strength, excellent developmental practitioners, and the resilience and adaptability in meeting its mandate.
Loan Asset Quality: The DBSA loan book, on average, remains largely moderate risk when compared to last year, and non-performing ratios improved when compared to prior year. During the year under review the gross development loans and development bonds reached a record of R108bn on the back of increased disbursements, currency exchange movements and prevailing high interest rate environment. The single largest risk that the DBSA faces from its lending activities is credit risk. The Bank has remained conservative in provisioning and proactive in loan management and monitoring given the evolving current economic environment and negative outlook skewed to the downside.
- Funding and Liquidity Management: The Bank successful raised funding from a diverse pool of local, international commercial banks, international development finance institutions and the domestic fixed income market amounting to R11bn. The Bank’s loan book remained resilient in a challenging economic environment, with high cash collections of approximately R17bn, comprising interest of R8.5bn and capital R8.5bn. The Bank continues to have high liquidity levels which allows the Bank to successfully meet maturing financial obligations and disbursement targets.
- Capital Adequacy: The Bank’s capital base expanded substantially by R5.2bn when compared to last year’s R3.8bn increase in the equity base. The Bank’s capital ratio, expressed as a percentage of balance sheet shareholder capital to unweighted total assets, increased to 44% as of 31 March 2023 from approximately 43% as of 31 March 2022. Overall, the Bank remains well capitalised.
- Total Assets: The Bank’s total asset base soared to a record R109bn as of 31 March 2023. The previous financial year closed with R100bn. The increase is due to new disbursements and currency movements.
“Closing the year with a notable financial position as this, is a testament to the strength of our institutions and their custodians, Team DBSA. Striking a fine balance between meaningful development and financial sustainability, we have weathered what continues to be a tough operating environment both locally and internationally, with an increasingly complex global geopolitical landscape. Key to these encouraging financial results is our commitment to governance, particularly accountability, as a driving value that we hold dear across all our divisions. This means that beyond our balance sheet, we have ensured that all our projects have well-defined and astutely measured sustainable development impact, delivering tangible benefits to our stakeholders,” said Boitumelo Mosako, CEO of the DBSA.
In this past financial year, R14.2bn in funds was catalysed to support various developmental initiatives. This is important for the DBSA in its role of crowd financing and accessing other sources of funding. This year, the Bank had a record R13.7bn in loans and bonds disbursements, accelerating the implementation of a multitude of essential projects across all sectors.
The Bank’s project preparation arm unlocked a total value of R25.4bn in approved projects. This capability is critical in plugging gaps in the market and ensuring that the country has a strong pipeline of bankable projects. The division’s work to bring projects to bankability and therefore unlock funding and investment speaks to accelerated service delivery through an infrastructure development value chain that is fit for purpose.
The DBSA continued with its extensive expertise in financing municipal and local government infrastructure development efforts. In the reporting period, under-resourced municipalities addressed urgent disparities in service delivery with access to R2.1bn of infrastructure funding and support. This support is bolstered by non-financial support to ensure adequate capacity to deliver to citizens.
The DBSA’s exemplary performance is possible through effective partnerships in South Africa and across the region. In the reporting period, the Bank joined forces with various institutions to bolster the delivery of its mandate and foster regional integration. Two key partnerships and programmes of note include:
- Regional Integration - the DBSA and the West African Development Bank entered a partnership to lay the foundation for broader cooperation between the West African Economic and Monetary Union and Southern Africa at COP27 in November 2022.
- Renewable Energy – in the period of reporting, the European Investment Bank and the DBSA reached a formal agreement to finance a targeted renewable energy programme in South Africa. The programme aims to unlock funding for private sector investment in renewable energy projects across the country. The total initiative, equivalent to R7.7bn, will facilitate the funding of various new renewable energy ventures in South Africa.
The Bank continues to focus on increasing the participation of small to medium scale enterprises, in particular black-owned entities, and black women-owned entities by providing access to finance, project preparation and procurement opportunities. In pursuit of this goal, the projects funded by the Bank created 9,951 job opportunities; 1,524 SMMEs benefitted and the value of spend allocated to SMMEs and subcontractors was R785m.
Social infrastructure is a critical touchpoint for the DBSA with a strong focus on building schools and supporting foundational education interventions as it has been in past financial year. 2,208 learners across the education sector benefitted from the various projects the Bank did across the country. The Bank refurbished 85 schools, benefiting 64,400 learners. In collaboration with the Department of Basic Education, the DBSA launched Sanitation Appropriate for Education, SAFE, a project that delivered 162 ablution facilities in schools. The collaboration created 10,362 temporary and permanent jobs, delivering a catalytic effect to local economies.
“Our social infrastructure interventions are a key part of our work in South Africa, and education has been of particular interest because we truly believe in its power to transform lives. Ensuring access to quality education at an early age opens opportunities for young people and alleviates families and communities in remarkable ways. Our focus therefore has been on building and refurbishing schools in underserved areas and building student accommodation at tertiary level. We are driven to play our part in bridging the education gap for more empowered communities with tools required to shape their own destinies,” emphasised Mosako.
The Bank invested in party funds as a means of amplifying development impact in the short to medium term. These engagements impacted 3,842,965 people in food and food-related services, support to 144,519 smallholder farmers and micro-entrepreneurs, creating 14,006 permanent jobs in the agricultural sector. This accomplishment is over and above the Bank’s infrastructure development mandate.
The Bank’s profits were disbursed in moonshot projects that aim to deliver high impact in previously disadvantaged communities and with young people, particularly. An example of this engagement is the Development Laboratories (DLABs), a solution for the growth of township economies. Through DLABs, the Bank partners with various role players to build ecosystems of innovation and empowerment, and these mobilise investment inflows and yield developmental returns. In the last financial year, the Bank disbursed to five DLABs which are in Gauteng, Western Cape, Mpumalanga, and North West.
"As Team DBSA, we will continue to create a meaningful and lasting impact across the African continent and the results show our exemplary performance. Our focus continues to be investing in sustainable projects that promote economic growth, environmental preservation, and social upliftment. Our success comes from strong governance processes and very importantly, a strong team that espouses service excellence. Key to that are the various partners who are part of the infrastructure development value chain at all spheres of government. Working together with them, we are driven to find solutions to system blockages and improve ecosystem efficiencies. That, coupled with innovative financing, will change infrastructure delivery from being seen as a long-term engagement to one that is fit for purpose. When all is said and done, our mandate to deliver development impact in a financially sustainable manner will surely continue bending the arc of history towards a shared prosperity,” concluded Ms. Mosako.
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About the Development Bank of Southern Africa (DBSA) - The DBSA is a leading Development Finance Institution (DFI), wholly owned by the government of South Africa. Established in 1983, the DBSA is mandated to promote economic growth and regional integration by mobilising financial and other resources from national and international private and public sectors for sustainable development projects and programmes in South Africa, SADC, and the wider African continent.
For more information visit www.dbsa.org. Email: email@example.com