South Africa: EU, DBSA Launch R1.5 Billion Infrastructure Fund

The European Union (EU) and the Development Bank of Southern Africa (DBSA) have launched a €100-million (R1.5-billion) programme to provide grant funding in support of loans for essential infrastructure projects in South Africa and the southern African region.

"The establishment of this fund could not have come at a better time," DBSA CEO Patrick Dlamini said at the launch of the Infrastructure Investment Programme for South Africa (IIPSA) in Midrand, Johannesburg on Thursday.

While the South African government had prioritised infrastructure development as a catalyst for tackling poverty and unemployment, Dlamini said, adequate infrastructure funding had become "a key constraint to faster economic growth and social inclusion both in South Africa and in the SADC region.

"We therefore view this programme as a strategic intervention to fund South Africa's national and regional infrastructure projects, especially at the critical initial stages to prepare projects to bankability."

EU Ambassador to South Africa Roeland van de Geer said the fund would provide innovative financing that blended EU grants with long-term financing from participating South African and European development finance institutions.

"It also aims to attract private financing into projects with a high socio-economic return by enhancing the financial feasibility and project quality and/or by reducing the risk associated with such projects," Van de Geer said.

According to a joint EU-DBSA statement, projects to be supported will be selected from a list of priority projects established by an IIPSA committee, and will be directly linked to the priorities of the South African government, EU-SA priorities for cooperation, and the regional infrastructure strategy of the Southern African Development Community (SADC).

Priority sectors will include energy, transport, water and environment, ICT and social infrastructure.

"A Request for Proposals will be issued in early April 2014 inviting potential recipients to propose infrastructure investments whose development would be enhanced by the use of IIPSA grant funding alongside other forms of financing," the statement read.