DBSA, EU launch €100m infra fund

The vehicle will provide grant funding in support of loans for projects in Southern Africa, with a Request for Proposal expected in early April.

The Development Bank of Southern Africa (DBSA) and the European Union (EU) have launched a R1.5 billion (€100 million; $139 million) fund to support infrastructure development in the region.

The Infrastructure Investment Programme for South Africa (IIPSA), managed by DBSA, will provide grant funding in support of loans for infrastructure projects in South Africa and neighbouring countries.

The capital provided by the EU, pooled together with funds coming from South African and European development finance institutions, will also aim to attract financing from private investors by enhancing the projects’ financial feasibility while reducing associated risks.

A Request for Proposals is expected to be issued in early April.

“The establishment of this fund could not have come at a better time because lack of adequate infrastructure funding has been identified as a key constraint to faster economic growth and social inclusion both in South Africa and in the SADC region”, said Patrick Dlamini, chief executive of DBSA, in a statement.

While more advanced than some of its Northern counterparts, South Africa suffers from a serious infrastructure gap. The backlog for road maintenance alone is estimated by the South African National Roads Agency at close to R150 billion, while the need for power distribution, maintenance and rehabilitation investments is said to have increased by R2.5 billion annually over the past few years. Studies published in 2013 found that almost half of all South African water was stolen, wasted or leaking away.

Infrastructure development is seen by the government as a means to address the country’s triple scourges of high unemployment, poverty and inequality. Launched in 2102 to map out the country’s National Infrastructure Plan, President Jacob Zuma’s Presidential Infrastructure Co-ordinating Commission (PICC) has identified a long-term project pipeline worth R4 trillion.