DISTRICT DEVELOPMENT MODEL (DDM) - SALGA

1 DISTRICT DEVELOPMENT MODEL (DDM) DISTRICT DEVELOPMENT MODEL KNOWLEDGE EXCHANGE AND PEER LEARNING SESSIONINTEGRATED INFRASTRUCTURE PLANNING AND INVESTMENT AS A CATALYST FOR A SUCCESSFUL DDM10 DECEMBER of the DISTRICT DEVELOPMENT MODEL (DDM) Pilots road of the One plan implementation of the DBSA TABLE OF CONTENTS2 TheDDMisanall-of-governmentapproachtoimp roveintegratedplanninganddeliveryacrosst hethreespheresofgovernmentwithdistrictan dmetropolitanspacesasfocalpointsofgovern mentandprivatesectorinvestment. TheDDMisaimedatfacilitatingintegratedpla nning,deliveryandmonitoringofGovernment sdevelopmentprogrammesthroughtheconcepto fajoint OnePlan inrelationto52developmentspaces/impactzo nesthroughtheestablishmentofnationaltech nicalcapacityaswellasdistricthubsthatwil ldriveimplementationoftheprogramme. Thisapproachwillnotonlyacceleratelocalec onomicdevelopment,urbanization,economica ctivitiesbutalsotheprovisionofbasicservi cesandothertailor-madesolutionssuchas Covid-19interventions OF THE DISTRICT DEVELOPMENT MODEL (DDM)3 All-of-government approachthat seeks to reorganize state accountability & coherence to better address poverty, inequality and reinforcement of cooperative governancethrough a more cohesive system of programmatic planning, budgeting & implementation to bolster developmental on developmentof the One Plan as an IG plan setting out a LT strategic framework to guide investment & delivery in the 52 DISTRICT /metro of govt s response to the new normal where shared collaboration and genuine partnerships are needed to tackle to post C-19 socio-economic shocks & social compactinginvolving all key stakeholders in DISTRICT /metro spaces to unlock DEVELOPMENT & economic OF THE DISTRICT DEVELOPMENT MODEL (DDM)

2 BENEFITS OF THE DDM4 OVERVIEW OF THE DISTRICT DEVELOPMENT MODEL (DDM)5 OVERVIEW OF THE DISTRICT DEVELOPMENT MODEL (DDM)6 DDM-PILOTS ROAD MAP7 OVERVIEW OF THE ONE PLAN IMPLEMENTATION METHODOLOGY (1/3)8 Project preparation, including cost benefit analysis and feasibility studies Identifystrategic,criticalandhighimpactp rojectsthatwilldeliverthetransformations /changerequired; Developprojectconcepts; Developbusinesscasesfortheseprojects; Undertakecostingexercises; Identifyrevenuestreams; Preparefeasibilitystudieswithcost-benefi tassessment; Preparefinancialmodelsandinstitutionalar rangements; Undertakeduediligence; Engagewithfundersandinvestors;and Legalandfinancecapabilitiestoclosetransa ctionsOVERVIEW OF THE ONE PLAN IMPLEMENTATION METHODOLOGY (2/3)9 Implementing projects and actions Secureandapplybudgetallocationsandpairwi thexternalfunding; Fundingandprocurementstrategies; Credibleprocurementprocesses; Contractmanagement; Projectanddeliverymanagement; Manageprojectinstitutionalarrangements; Projectmeetings secretariatandadministration; Stakeholderandcommunityengagement;and OngoingPubliccommunications.

3 Lookatmandatoryadoptionoftheframeworkfor infrastructuredeliveryandprocurementmana gement(FIDPM)OVERVIEW OF THE ONE PLAN IMPLEMENTATION METHODOLOGY (3/3)10 Someofthemonitoringandevaluationactiviti esinclude: DevelopLong-TermPlanningKeyPerformanceIn dicators(KPIs); Specifyperformancemeasuresandtargets; Incorporateintothemunicipalperformancema nagementsystem; Translateintodepartmentalperformancemeas ures; Translateintoindividualperformancemeasur es; Regularmonitoringandreportingagainstinst itutional,departmentalandindividualKPIs Conductindependentevaluationsandongoingb enchmarkingexercises; Conductcommunitysatisfactionsurveys;and OF THE DBSAV isionAprosperous and integrated region, progressively free of poverty and dependence3 Mission To advance the DEVELOPMENT impact in the region by expanding access to DEVELOPMENT finance and effectively integrating and implementingsustainable developmentsolutions Improve the quality of life of people through the DEVELOPMENT ofsocial infrastructure Support economic growth through investment in economicinfrastructure Support regionalintegration4 Strategic objectives Sustained growth in developmentimpact Integrated infrastructuresolutions Financialsustainability5 Founding year19831 Shareholding structure100% owned by SA Government through the Ministry ofFinance2 Catalyze economic growth through investment in economic & social infrastructure and supporting regionalintegration11 OVERVIEW OF THE DBSAMANDATEOur primary purpose is to promote economic DEVELOPMENT and growth.

4 Human resource DEVELOPMENT and institutional capacity building in South Africa and the wider AfricancontinentVISIONA prosperous and integrated resource-efficient region, progressively free of poverty anddependenciesDBSA s primarymarketDBSA s main focus outside ofSADBSA s secondary (and recent) focus outside of SAPRODUCTS &SERVICESSECTORSP rimary: Energy Transport ICT Water &SanitationSecondary (only inSA): Education, Housing HealthGEOGRAPHICFOOTPRINTDBSA s mandate covers the whole of Africa, but the bank focuses mainly on South Africa, SADC and priority countries outside of SADC12 DBSA S VALUE PROPOSITIONP roject DEVELOPMENT value chain from planning to maintenance of infrastructure||PlanPrepare12 Finance3 Build4 Maintain/ improve5 Projectidentification Feasibilityassessments Technicalassistance Financialstructuring Project Preparation funds LeadarrangerProvide vanillaand boutique financing opportunities Debt MezzanineFinance Limited non recourselending Managing the design and construction of key projects in the education.

5 Health and housingsectors Project Management support Nationaland provincial government departments MunicipalitiesSouthAfrica Municipalities SOE PPP PrivatesectorRest ofAfrica SOE Public Private Partnerships Sovereigns Supporting the maintenanceand/or improvement of key infrastructure projects Nationaland provincial government departments MunicipalitiesServicesClientsSouthAfrica Municipalities SOE PPP PrivatesectorRest ofAfrica SOE Public Private Partnerships Sovereigns Infrastructure plans Sector and masterplansSouthAfrica MunicipalitiesThrough integrating across the value chain, DBSA will drive infrastructure delivery in an effective and timely manner13 AdditionalityCatalyticEffectProjectSusta inability Prioritisingunder-resourcedandunder-fina ncedcommunities,sectors,segmentsandgeogr aphies( ,UmvotiElectrification,surfacingroadsinM dantsane,etc.). Focusing on developmental opportunities that may not be important to commercial banks ( implementation agent for government, capacity building, etc.)

6 Going whereotherinvestorsdon tPavingthewayforotherstofollowReducingde pendenceonaid Crowdinginprivate sector investmentbysetting aprecedentfordevelopmentinparticularhigh riskenvironments Creatingdistributionchannelsandexpanding supplychainsincertainsectorstoaccelerate developmentandmoreinvestment Using investment to build sustainable sources of jobs, tax income and infrastructure within the targeted area Providingabasisforinvestmentstogrowtobes elf-sustaining Ensuring investments align with environmental, social, and governance best practiceSuccess factorsforDBSAE xplanationSource:Dalberg(2010),Teamanaly sis14 Structuring financing mechanisms to allow for greater risk appetite bythe appropriate party in the sCRITICAL SUCCESS FACTORSA ssuming early risks to enable participation of others in financing sustainable infrastructure DEVELOPMENT |15 Spatial restructuringSpatial Planning, Land Use Management Planning, TownshipEstablishment, Integrated Infrastructure Investment PlanningSocial Environmental and Governance Alignment to National Strategic GoalsRisk Analysis and Mitigation, Commercial Viability, Financing OptionsEarly-stage programme and project DEVELOPMENT (strategic and economic case)Capacity to Deliver, Implementation Structures, Monitoring and EvaluationAffordability and Project StructuringProjectPreparation(Infrastruc tureDevelopmentandUpgrading)

7 FinancialsustainabilityofLG,increaseinus efullifeofassets,improvementinqualityand reliabilityofservicesupply,Improvedcusto merserviceIntegratedServicesSupportReven ue Management SupportAsset Care/Maintenance Management Project Implementation SupportInstitutional Skills DEVELOPMENT ( Leadership, Contract and Project Management)Embedded GenerationInputs For Sustainable InvestmentEnvisaged OutcomesDBSA sSUPPORT TO LOCAL GOVERNMENT (LG)Supporting LG to create an enabling environment for infrastructure investments by public and private sector|DescriptionBridging FinanceLong-term Facilities2 Instruments Bridging finance (BF) to assist with expediting grant funded projects or bridging proceeds of long-term loans. Conditional grants front loading bridging of conditional grants over the MTREF (2-3 years)1 On-balancesheetdebt-vanillaloansandbonds upto30years Project(cash-flowsbacked)Finance Sculptedandstructuredloansthatmatchtheex pectedprojectcashflows Blendedloans(tenorandinterestrates) InternationalDFIcreditlines, Mobilising3rdpartysectorspecificfunds( ,GCFandGEF) Creditguaranteesandfirstlossinstruments Subordinated(mezzanine)debtinstruments Catalyzingprivatesector(commercialbanksa ndassetmanagers)fundsbyallowingprivatese ctortotaketheshorterendwiththeDBSA takingthetailendofthedealCreditEnhanceme ntSecuritizationstructure3 DBSA s FUNDING INSTRUMENTSI nnovative Financing for LG -Multiple Municipal Infrastructure Financing Instruments16|DBSA S FINANCING INSTRUMENTS Innovative Financing for LG -Multiple Municipal Infrastructure Financing Instruments Leveraging Grant Funding: Pool financing CG.

8 Leveraging grants for the unfunded infrastructure requirement and crowding in private sector investment. Pooling mechanism by consolidating unspent conditional grants to fund pooled infrastructure projects (work-in progress) Pooled finance mechanism for creditworthy metros and secondary cities not developed For other municipalities to become a part of PFM intense efforts must be made to increase their creditworthiness and management capacityPool Financing (under-consideration) Means for transferring the obligation for funding of bulk and connector infrastructure from the city to the developer and property owners. Range of instruments including land value capture, tax incremental financing, land lease, developer contributions, etc. Important funding option when considering the limited extent to which transfers, city own source revenues and service provider funding are able to over the infrastructure investments based Financing1754|18 Strategic Partnerships National, Provincial and Local Government plus collaboration with 7 PMU s across the country.

9 Local Government Representative Bodies and Traditional Leaders. Multi-National DEVELOPMENT Banks, DEVELOPMENT Finance Institutions, Commercial Banks, and Private Sector. Sector Based Funding Solutions Project DEVELOPMENT , innovative financing, high risk appetite. Provision of non-lending support to strengthen institutional capacity and create a conducive environment to crowd in private sector financing. Implementation support and high capacity infrastructure delivery modelsClient Centricity Dedicated teams that identify LG support needs and under-take comprehensive due diligence to identify appropriate solutions Emphasis on access to services by all communities and supporting economic growth drivers Strong client and portfolio management to identify distress early and provide supportDBSA S COMPETITIVE ADVANTAGEA ssuming early risks to enable participation of others in financing sustainable infrastructure developmentTHANK YOU