DBSA signs ZAR100bn Infrastructure Fund deal
Infrastructure South Africa (ISA) has entered into a memorandum of agreement with the National Treasury and the Development Bank of Southern Africa (DBSA) for the ZAR100 billion ($5.74 billion) Infrastructure Fund.
The fund - announced by South African President Cyril Ramaphosa in 2018, is aimed at building on efforts to transform public infrastructure development in the country, and is meant to “fundamentally transform the State’s approach to the financing of infrastructure projects and reduce the current fragmentation of infrastructure spend and, thereby, ensure more efficient and effective use of resources and improve the speed and quality of delivery”.
It is intended as government funding and ancillary support for co-financing of blended finance programmes and projects. This includes financing from the local capital market and international financing institutions as a complement for the broader budgeting reforms that the government is undertaking to address problems in the infrastructure value chain.
The fund will be used as viability gap funding for large-scale infrastructure investments, and support will take on different forms, including fund-deserving infrastructure projects, blended co-funding, capital subsidies or interest rate subsidies and guarantees.
Provision has been made for ZAR100 billion over ten years, with ZAR10 billion funding in the current medium-term expenditure framework baseline.
The DBSA will establish the Infrastructure Fund through a dedicated implementation unit housed in the DBSA. It will also manage and administer the fund, and facilitate the financial structuring, procurement and implementation of priority blended-finance projects and programmes, as identified by ISA.
