Affordable Housing Development and Finance Conference

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					Affordable Housing Development and Finance Conference

                  “Moving Forward Together”
           Johannesburg Country Club 21 September 2010




                                      Pamela Sekhonyana
                                Human Settlements Specialist: DBSA
         PRESENTATION OUTLINE
• DBSA Mandate

• DBSA Product Offering

• Project Funding Criteria

• DBSA’S Support to the Housing Sector

• Examples of Major Affordable Housing Investments

• The New Development Agenda: Implications for DBSA

• DBSAs Impact in the Delivery Value Chain

• Conclusion                                          2
                       DBSA MANDATE
• South Africa :
   – Bulk of DBSA portfolio, finances public institutions (Municipalities)
     which provide infrastructure-related services to communities.
   – Strengthens implementing capacity in municipalities.
   – Participate in private sector / BBBEE transactions.



• SADC region
   – Provide financial & non-financial products and services to mainly
     public utilities in SADC and NEPAD Projects which support regional
     projects which impact on more than one country.




                                                                   3
 DBSA PRODUCT OFFERING
• Debt
  • Long-term debt, up to 10 years for $
    and Euro financing and 15 years for
    ZAR
• Mezzanine Debt
  • Various subordinated debt products      • Project Preparation Funding
• Equity                                      • Technical Assistance Loans
                                                applied towards project preparation
  • Direct equity in select projects to
                                                with the aim of increasing the
    further enhance an institution’s            bankability of the project
    development role
                                            • Capacity building
• Guarantees                                 • Assist institutions in identifying,
  • Partial credit enhancement of capital      developing and managing
    market issues                              investment opportunities that the
• Arranging & Underwriting                     Bank can fund
                                            • Advisory
  • Lead and co-arrange and underwrite
                                              • Fee-based advisory work
    where DBSA is Lead Arranger                                            4
    PROJECT FUNDING CRITERIA
• A project must be consistent with the DBSA’s
  sectoral    and    geographic    mandate       (i.e.
  infrastructure development within the region).

• Projects must be financially and economically
  viable and must benefit the economy of the host
  country.

• Project    must    be     socially   responsible,
  environmentally      sustainable,      technically
  appropriate and legally and contractually sound.

• The implementing agency must have the
  institutional capacity to plan, implement and
  manage the project.

• Overall, the development impact of the project
  should be maximized and be sustainable.                5
DBSAs SUPPORT TO THE HOUSING SECTOR
• DBSAs support to housing is aligned to and supports the government’s
  BNG Strategy, and the realization of the Bank’s Vision 2014 and Human
  Settlements Strategies

• Over the past couple of years DBSA has been approached by a number of
  municipalities that have major infrastructure backlogs to provide bridging
  finance for housing projects; more recently DBSA has also been
  approached by various private sector institutions and organizations

• The bank has provided financial support to housing projects characterized
  by high diversity, including::
      Low-income housing developments;
      Flats in the CBD to be rejuvenated for residential purposes
      Mixed-use, mixed income developments;
      Student accommodation developments
      Affordable / GAP market housing developments;
                                                                   6
       EXAMPLES OF MAJOR AFFORDABLE HOUSING
                    INVESTMENTS
• In 2008 and 2010, DBSA made two major affordable housing investments:

  International Housing Solutions Fund (IHSF) - a private equity fund
  (R210m) to make privately negotiated equity and equity related investments,
  focused on developing affordable housing solutions for the lower to middle
  income housing sector in South Africa, by stimulating private sector
  investment and innovation.

  Housing Impact Fund (HIF) – a R3b investment alongside the Old Mutual
  Life Assurance Company of South Africa (OMLACSA), the Public Investment
  Corporation and Eskom Pension and Provident Fund, with the purpose of
  making a strategic investment in one of the key areas of the Bank’s
  mandate.
“THE NEW DEVELOPMENT AGENDA”


Re-positioning DBSA as a Centre of Excellence for: Infrastructure
  Planning and Infrastructure Financing and Investment
   Implications:
      Targeting high-impact infrastructure and industrial sectors
      Support and Innovation: Institutional and Financial instruments
      Bank Approach: Catalytic and Interventionist (no more
      waiting!)
      Supporting project cycles from Concept to Realization
      From a demand-led “just financier” role, to a “pro-active &
      interventionist role”


                                                                    8
DBSA’s IMPACT IN THE DELIVERY VALUE CHAIN


              Project
Housing                             Land              Detail      Bulk          Reticulation
           Identification                                                                      Top Structures
Backlogs                          Acquisition        Planning    Services        Services
           and scoping




               Tech                 Bridging            Prep
             Assistance              Loan               Assist




                            Preparation Assistance




                                                                            Loans                  Bridging
                                                                                                   , Loans
                                                                                                   or Equity
                           CONCLUSION
• There is a huge demand in the affordable / GAP housing market and in
  recognition of this the government has put in place measures to ensure
  increased participation of the private sector, including major DFIs

• Several initiatives considered by the bank have been reviewed with a
  view to understanding its appropriate role in the delivery value chain, in
  particular how to most effectively play on our strengths and leverage
  partners, skills and expertise

• The bank should focus on providing funding and supporting areas and
  institutions not currently supported by commercial banks.

• Partnerships with skilled and experienced parties, operating in a
  commercial manner, means that the bank will be able to share the
  market risk with other role-players, leverage their skills and networks
  and catalyse private sector financial resources into this sector
            THANK YOU
       Pamela Sekhonyana
Development Bank of Southern Africa
        Tel: 011 313 3372
        Cell: 078 802 1458
     Email: PamelaS@dbsa.org




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