Speech by Deputy Finance Minister Nhlanhla Nene, MP On the ...

Speech by Deputy Finance Minister Nhlanhla Nene, MPOn the Occasion of DBSA’s Partners’ ForumGood evening distinguished guests, ladies and gentlemen.Let me begin by thanking the Board and Management of DBSA for organisingthis engagement with its partners and stakeholders. Engagement and dialogueare indispensable in building a common understanding and establishing ashared development agenda. And these are the foundations on which robustand meaningful partnerships are built.One of the lessons of the past decade is that the sheer size and legacy ofpoverty and inequality seriously requires governments and developmentinstitutions to draw on many partners, leveraging their resources and strengths.It means that efforts must be concerted and that risks, responsibilities andresources must be shared – creating greater efficiency, effectiveness andultimately synergy. The substantive value of partnerships goes far beyondrelationships and cooperation. It is about creating greater value, delivering moreand better, with limited resources.1

Let me take this opportunity to reflect on the changed context of developmenthere in South Africa and the wider region over the last two years. As aneconomy, we still face classical challenges of a developing economy: too fewresources chasing too many social and economic challenges. The need forfocus and prioritisation cannot be over-emphasised.While economic impairment arising from the financial crisis has not been of apermanent nature, the recovery from this requires conscious orchestration, anda focused approach, to avoid further regression, and to thereby ensure SouthAfrica takes the opportunity to be buoyed by global recovery.Despite the fact that the worst of the financial crisis and downturn is behind us, itremains a fact that the demand for resources is at its peak. Accordingly, theimperative for effectiveness has never been greater. Our considered view inGovernment is that, as the role of the state is strengthened to championdevelopment more vigorously, state-owned enterprises, including developmentbanks, will have a more critical role to play.The matter of the role and effectiveness of state owned enterprises (SOEs) anddevelopment finance institutions (DFIs) has been in the public discourse forsome time now. Objectively, the government seeks to eliminate poorgovernance and the wastage of resources where this is evident. It also seeks toensure the alignment of these key public institutions to the social and economicobjectives of Government.2

Much has been observed and said on the performance of SOEs and DFIs, but itmay not be apparent to the general public yet that there is significantly greaterconsensus and emerging clarity on the mandates and foci of public enterprise ingeneral, as a result of intense engagements by supervising Ministries.Similarly, it has been observed that the state’s machinery is notorious for itsuncoordinated approach to delivery of its mandated objectives. In anenvironment where resources are scarce, co-ordination and prioritisation ofobjectives is of primary importance. The introduction of performanceagreements for all state departments and DFIs, while engenderingaccountability, will assist in ensuring common objectives, planning and acoordinated approach to delivery. This will equally ensure that resources suchas SOEs and DFIs are optimally deployed towards key government objectives.South Africa needs stronger and smarter partnerships to increase investmentsin infrastructure development and public goods, to stimulate local economicdevelopment, and to generate as many jobs as possible, especially jobs thatcan absorb the large and growing numbers of unemployed youth. Suchpartnerships should enable greater developmental outreach faster, and alsohelp create better conditions for further investment and innovation.3

I have over the past year taken a deliberate interest in the Development Bank ofSouthern Africa (DBSA). Noting that DBSA has credibly carried out its mandate,and has been amongst institutions that government broadly has relied upon foraddressing both social and economic challenges, we have resolved that DBSAmust focus on the government’s infrastructure agenda, and by consequence,the DBSA needed to align its strategy accordingly. The Bank must become acentre of excellence on infrastructure.DBSA’s role is to champion socio-economic transformation throughinfrastructure and economic development, with emphasis on enabling servicedelivery, regional integration and job creation.In this regard, I am pleased that the Bank has accepted a number of keyinfrastructure programs that are reflective of its expanded performance plan, keyamongst which are:a) working with National Treasury on the development of Health PPPs acrossthe country, as follow-up of the adopted Health road mapb) assisting the Department of Water Affairs in planning and co-financing theexpansion and rehabilitation of water and sanitation infrastructure to helpensure that there is no crisis in this area4

c) assisting the Department of Education in planning and co-financing theeradication of mud-schools throughout the country. School infrastructurerequires special attention in line with the education roadmap. The DBSAis working on a program to assist provinces to expand sustainableinfrastructure for educationd) promotion of green energy and support of large scale roll-out of demandside management to reduce energy consumption, in response to thecountry’s carbon reduction targets. The Bank has adopted this new thrustin consultation with National Treasury and the Department of Energy.The Bank has also accepted the need to innovate and evolve further its regionalapproach to infrastructure and economic development. Key in this regard isbuilding deeper institutional partnerships with regional stakeholders, financialinstitutions and international development partners. I am pleased to announcethat DBSA’s regional development work will soon be taken to another level, as anew regionally-focused structure is created to enable the DBSA to better servethe cause of regional economic development and integration.This is being done to enable the region to leverage greater resources and toadvance priority infrastructure projects in support of trade and shared regionalresources, be it in terms of clean hydro or solar power, cross-border roads orcross-border river basins. It will enable better focus, better engagement andenhanced risk management. Stronger partnerships are key to the building ofadditional institutional, financial and technical capacity that will enable the regionto drive its integration and transformation agenda.5

The Ministry of Finance will be working closely with the Board and Managementto ensure that these important programs and initiatives are implemented andthat the Bank is ably resourced to execute on its expanded mandate.In conclusion, ladies and gentlemen, let me take this opportunity to pay tribute toJay Naidoo, the outgoing Chairman of the DBSA Board of Directors. The DBSAhas thrived and become a very strong development institution under hisleadership over the past decade. The success of the DBSA is testimony to thequality of the leadership that he has provided. Jay, it is a pleasure to convey mysincere and wholehearted appreciation to you for your meaningful andsignificant contribution to the success of the DBSA.Let me end by commending the Board, Management and staff of the DBSA fortheir devotion and achievements. As your principal shareholder representative, Ilook forward to more achievements and the setting of new benchmarks indevelopment activism.Thank you.6