Deputy Speaker, comrades and friends, for some time now we have committed ourselves ... [Interjections.] You should be listening to the content of what I'm saying, rather than what I look like. I've never presented myself as being particularly interesting, for, since my primary school days, I have never been able to draw any of the girls to me. [Laughter.]
Therefore, I've got no illusions in that regard, especially now that I have so little hair and a greying beard. But maybe I have something useful to say!
As I was saying before I was so rudely interrupted on a very irrelevant point - I'd hoped that the Speaker would protect me against that - I think we're very clear about it that in different ways we've been saying for some while now that we are committed to forging a developmental state. In fact, the National Development Plan, NDP, and the Medium-Term Strategic Framework, MTSF, are to a large extent, if not wholly, directed towards that.
Obviously, the role of the development finance institutions, DFIs, has become more important than perhaps they have ever been; and so it is with the Development Bank of Southern Africa, DBSA.
We cannot, we are clear, become fully developmental on our own, given the links we have with the Southern African Development Community, SADC, region and, in fact, the continent as a whole. We have to contribute to the extent we can to the growth and development of our neighbours, not just in the SADC environs, but beyond that too, which is what this Bill is substantially about.
The amendments to the Development Bank of Southern Africa Act, the Development Bank of Southern Africa Amendment Bill as it's called, seek to do that. It recognises that we have to give a legal mandate, if you like - not if you like, because it is in fact a legal mandate - for the DBSA to go beyond the SADC territory.
To some extent in a limited form it's happening already and to a large extent, therefore, this Bill gives a firmer legal foundation and provides a rational basis for this, which Parliament and the public out there can then monitor.
The Bill authorises the DBSA to increase its authorised share capital, which essentially refers to the maximum amount of capital that the DBSA can raise in terms of section 13(1)(a) of the Act.
The Bill will allow the DBSA to raise this money independently. It's very consistent with what the Minister said in the Medium-Term Budget Policy Statement that the national fiscus is not going to be unduly interfered with through the activities of the state-owned enterprises, SOEs, and the DFIs while performing their developmental and other tasks.
What is interesting is that the Bill also allows the Minister, after consulting with the board of the Development Bank, to change the ceiling of the authorised share capital. So it could be increased if circumstances allowed for it, but, interestingly, it could also be decreased if the circumstance provide for that.
Therefore the extension of the bank's territorial mandate will enable it to participate in large-scale infrastructure and other strategic projects on the African continent outside the SADC region, which have the potential to advance trade and economic growth on the continent and support South Africa's binational commissions and commitments to regional integration.
This is very important. There are members on the committee or people elsewhere who are concerned whether, given our financial constraints, this is the right way to go. But if you look at the Bill and if you look at the interactions we had in the committee, what emerges very clearly is that it's going to be a very sober, pragmatic, strategic intervention beyond the SADC countries and, in fact, the Minister will have to approve annual plans to go beyond the SADC countries.
The DBSA, it has to be noted, has rationalised and restructured and changed its business model and it is in a much better financial position now than it was previously. After a difficult 2012-13 financial year, the bank's financial performance in 2013-14 improved with a net profit for the year of R787 million from a net loss of R825,9 million in the previous year.
At the end of the 2013-14 financial year, the DBSA had development assets of R55,5 billion spread across 13 SADC countries mainly in the energy, water, transport and social infrastructure sectors.
While the DBSA's activities continue to be predominantly in South Africa itself, it can, as we said, play a key role in supporting South Africa's commitment to the rest of the continent and in doing so support, it must be stressed, our own economic development.
To find the right balance between investing in our country and in other countries is really the challenge. Parliament, to the extent that we can, will play a clear role, and, certainly, the Minister will seek to ensure that and we'll hold National Treasury to account in that regard.
The DBSA, of course, we need to be reminded, facilitates financial and nonfinancial investments in the social and economic infrastructure sectors. It provides financial, technical and other assistance. Its main focus is infrastructure-financing, but it also contributes to creating a climate for the private sector to become more involved in infrastructure investment. The bank acts as a financier, partner and advisor to development role- players and stakeholders. It fills in the gap where the market fails to invest in appropriate developmental projects.
Regional integration is crucial to the growth of the South African economy as well as to the growth of our involvement in the broader community - and we have had the DBSA to some extent getting involved in the North-South Corridor, which is under the leadership of the SADC, the Common Market for Eastern and Southern Africa, Comesa, and the East African Community, EAC. This is endorsed by the African Union, AU.
The programme is directed at regional economic integration through the upgrading and extension of transport links, road, rail, ports and one-stop border posts in Southern and East Africa, so South Africa champions this initiative through the Presidential Infrastructure Champion Initiative, Pici, which President Jacob Zuma chairs.
We have obviously raised with the National Treasury the need to have a co- operative relationship with the African Development Bank.
Obviously, there's also the pending formation of a Brics bank, and that too means that the DBSA has to carve out a niche or role that is complementary and doesn't blur its particular responsibilities and roles with that of the African Development Bank and the soon-to-be established Brics bank.
We received a submission from the SA Local Government Association, Salga, proposing that since a key aspect of the DBSA's work revolves around infrastructure investment at local government level, they wanted to have the opportunity, through the Act, to nominate representatives. I think they had the idea of two of the directors on the board being direct representatives of the SA Local Government Association.
We gave it our very considered attention, but after further engagement with the National Treasury, the DBSA and indeed Salga, we said a polite no. Amongst many other reasons, we first pointed out that the board is not meant to represent stakeholders directly in the first instance, as it would undermine the ethos of the board and how it is constituted.
Secondly, if Salga were to have its own representatives, why not the provincial sphere of government, or even the national sphere of government for that matter? Why not any of the other stakeholders? So it opens the floodgates, if you like, for all the stakeholders to say that they want to have direct representation on the board.
Moreover, thirdly, the Minister in any case appoints people according to certain criteria and he does include people with local-government expertise and experience. Indeed the current board has two such members. The Minister committed himself, as did the officials of National Treasury, to continuing to do so and know that our committee will monitor that they do precisely that.
Finally, we said that if Salga had its own representatives, they would secure their mandates from Salga and they would report back to Salga and in so doing undermine the collective spirit in which the board of directors of the Development Bank is required to operate.
What we chose to do instead is to make an amendment to the Act to provide for it that in choosing the skills set of the DBSA board as such, the Minister also has to take account of people who will have experience and expertise in the local government sector and that is what we delivered.
It is important to say, finally, as I conclude in the 52 seconds left to me, that the NDP aims to strengthen intraregional trade in Southern Africa from 7% to 25% by the year 2030.
The NDP explicitly expresses the importance of infrastructure development in attaining its developmental goals, not just in our own country, but on the SADC horizons and on the continent as a whole. Much of what is being done in this Bill is actually serving, yet again, as another example of how in many different ways, big and small, we are seeking to implement the National Development Plan. I thank you, Deputy Speaker. [Applause.]
Chairperson, the Development Bank of Southern Africa, DBSA, was established by the apartheid government in 1983 to finance economic development in the former so-called homelands. At that time, there was no appetite at all among the commercial banks or any other investors to offer development finance for this purpose.
After 1994 and over time, the DBSA's role and functions evolved to providing finance for economic development and growth in the Southern African region and also beyond the Southern African Development Community, SADC. In 1997, the Bank was re-constituted with a board of directors and registered as a company.
The Development Bank of Southern Africa Act also made provision for one of the main objectives of the bank to be to mobilise financial and other resources from the private and the public sectors. It increased the authorised share from R200 million in 1983, to R5 billion.
As things turned out, the Bank never was and still isn't able to attract private-sector finance. Instead, government now seeks to increase the authorised share capital of the Bank from R5 billion to R20,2 billion. What this in effect means is that government will make much more of our money available to this poorly performing institution that lost R409 million over the past three years.
Although it returned a net profit of R787 million this year, it lost R826 million last year and R370 million the year before. A turnaround strategy was implemented after the Bank almost collapsed under a R1,6 billion impairment of its dodgy loan book.
Another bailout would not be surprising given government's usual disinterest in the billions that it has already thrown into the bottomless pit that is the SA Airways, SAA, SA Broadcasting Corporation, SABC, and Land Bank, to name a few.
While everyone in South Africa and potential investors abroad wonder what the latest failure at Eskom will do to our already dismal 1,4% projected growth rate, its executives earn millions of rands in bonuses.
With the very real threat of another downgrade to our sovereign credit rating looming, the Minister made very bold promises that things would change; that our economy would see a fiscal course adjustment; that the approach to funding the state-owned enterprises would change; and that government would stop wasting our money. The Minister mentioned that another R20 billion support to Eskom would be funded through the sale of nonstrategic state assets.
The Minister needs to tell us if the DBSA is considered to be a strategic asset, and if it is, why? The Minister drew our attention to the fact that the concept of the state at the centre of our economy is failing. The elusive and nebulous developmental state isn't capable. The DA is unashamedly promarket. The market remains the most efficient allocator of scarce resources, and we know from failed experiments in central economic control across the world that the state cannot perform at the center of an economy.
We do agree that markets are not perfect and that government should intervene when the market fails. This is one of its core functions and it should be clear what the failure is, what measures it will take to intervene and, then, how it will withdraw its intervention.
The DBSA is a convenient source of capital funded by the people for crony investments that will never generate the returns that our economy so desperately needs. Before the Minister asked Parliament to amend the Development Bank of Southern Africa Act to provide more of the people's money to fund the Bank, did he invite investment from the private sector; and if he did, why did they not invest?
It also isn't clear whether the DBSA intends to compete with the African Development Bank and the proposed Brazil, Russia, India, China and South Africa, Brics Bank. Last year, the DBSA announced that it would return to its core mandate as part of its turnaround strategy. Now, it seeks to expand into competitive new markets. How did it stray from its mandate and what will stop it from straying again when it has more of the people's money to play around with?
The eyes of the world are on us as our economy becomes more and more fragile. After the Minister's Medium Term Budget Statement, MTBS, speech, everyone is wondering whether he will do what he says he will do. Will he actually change something that will demonstrate real political will to rescue our economy from the brink or is this just more talk and a desperate attempt to avert further downgrades that will render our debt as junk, cause the cost of our debt to skyrocket and drive more of our people out of jobs and into poverty?
Instead of investing more of the people's money in the DBSA, the Minister should do what he says he will do and invite private sector investment into DBSA, off-load liabilities that the state has no more money to bankroll, and take steps to ensure that the environment is conducive to other lenders.
Minister, this is not a good story to tell and you can change how it ends if you do what you say you will do. Thank you very much. [Applause.]
Hon Chair, vocabulary is not neutral. It is gender and class-biased. The EFF believes that this Bill, with the proposed amendments, will not lead to the radical transformation of the African economy or positively impact on the socioeconomic conditions of our people.
This government assumes that things and power relations exist in perfect harmony with one another and thus they indulge in a process of gradualism.
The thrust of the new mandate for the Development Bank of Southern Africa, DBSA, should include, amongst other things: massive investment in the development of the African economy; leading state-owned enterprises, SOEs, and foreign direct investments, FDIs, to heavily invest in the infrastructure industrialisation of the African continent, including nationalisation of the Reserve Bank.
South Africa's participation on the continent should be markedly distinct from the manner in which the Western powers, particularly the USA, European Union, EU, and China do business in Africa.
The development of the African continent is inextricably linked with the development of South Africa. In this context, South Africa's role in the economic development of the African continent should not be one of merely being a gateway to Africa's natural resources and raw materials, but should be one of promoting massive and rapid development of the African economies.
Through the DBSA the South African government should establish a sovereign wealth fund which will prudently invest in the development of the African economy. It is our firm view that we need a moment in which there is massive investment in the African economy.
For there to be an integrated, massive capital and financial investment and infrastructure roll-out, we need to break away from the orthodox development growth path of the last century.
This Parliament should consider, amongst other things, revising the mandate of the DBSA so that the focus would be on promoting a culture of entrepreneurship, trade opportunities, human resource development, training and reskilling of the African youth.
Unfortunately for the new liberal, orthodox economists in this House, this will require massive state intervention. I doubt if there is political willingness on the part of the ruling party to consider that.
The economic viability and financial sustainability in the global market, which is a hostile one, requires bold transcendency beyond regional borders, which is a direction in which this Bill makes no attempt, whatsoever, to go.
As the EFF, we are unable to endorse a Bill such as this, as it represents nothing other than recycled, old medicine with the same orthodox models of the Bretton Woods Institutions, which will never take the African continent forward.
Any change which assumes neutrality in language, vocabulary, class and national interests is bound to fail. The EFF says to the ruling party: Stop your delusional disorder of the neutrality of things. Now is the time for radical economic transformations and the EFF will provide and give the direction towards the realisation of economic freedom in our lifetime. Thank you. [Applause.]
Hon Deputy Speaker, in keeping with the vision of greater regional integration on the continent, we welcome the extension of the operations of this Bank to any national territory in Africa or its associated oceanic islands.
Development finance institutions, DFIs, play a key role in the facilitation of the flow of capital and foster greater economic growth and sustainable development, and must form a substantive part of our financial development arsenal. Whilst Africa is currently still ranked lower in the portfolio spreads of larger DFIs, it is growing in prominence as an investment destination.
The Development Bank of Southern Africa, DBSA, focuses on the development of key infrastructure sectors, such as water, sanitation, energy, transport, education and health. This is mainly achieved via the conduits of municipalities, state-owned companies, SOEs, independent power producers and public-private partnerships.
The problem inherent within these conduit channels are hindering in the extreme. Infrastructure development and maintenance through local government and state-owned companies remain a hit-and-miss affair.
Maladministration, incompetence and outright fraud and corruption in the supply chain management of these entities have rendered their outputs way below par. How will the DBSA counter such waste and mismanagement of funds? What greater form of oversight and accountability will be levied on the DBSA loans? These are the questions that we need to be asking ourselves.
The Bill envisages the Minister being able to initiate regulations without having to be requested by shareholders of the board to do so, and to unilaterally determine which other African countries outside the Southern African Development Countries, SADC, the DBSA may operate in.
What if one of these countries defaults on a loan? What risk-control measures are in place? Are they adequate? These are the questions we again need to ask.
Besides this Bill extending the bank's operations to other African countries beyond SADC, it also seeks to increase the authorised share capital of the DBSA to R20,2 billion. Furthermore, the Bill seeks to enable further increases to address the growing demand for infrastructure funding and enhance the Bank's capital base.
What checks and balances are in place to ensure that this money, if utilised, is put into sound investments? That is another question. The IFP supports this Bill, but would actually like the House to note all the concerns that we have raised. I thank you.
Hon House Chair, the NFP, after careful consideration, is of the opinion that the Development Bank of Southern Africa, DBSA, Bill, in its present form, is not in the best interests of the people of South Africa.
The Development Bank, as a listed major public entity in terms of Schedule 2 of the Public Finance Management Act, should first and foremost engage in financing ventures where beneficiaries are first and foremost South Africans. The NFP accepts the 70%/30% split between domestic regional involvement, as is currently the status quo, since 30% regional involvement is close to home and likely to benefit South Africans due to the proximity of recipient countries.
We are, however, concerned that financial involvement with other countries, which does not directly impact on the general well-being or improvement of the Southern African Development Community, SADC, region will divert resources away from the region and in the process dilute the benefit for South Africans. For this reason, the NFP does not support the amendment to increase the reach of the Development Bank of Southern Africa beyond the SADC region.
The NFP is also not in support of the amendment to increase the authorised share capital of Development Bank of Southern Africa. South Africans are faced with a strong possibility of increased taxes next year and we are constantly reminded that there is a need to cut back on expenditure; yet, the Bill proposes a massive increase of R15 billion in the share capital of the Development Bank of Southern Africa. Ultimately it is the taxpayer who will be burdened.
We may well say that the increased share capital will benefit South Africans as it increases the capital available to fund domestic projects in accordance with the 70%/30% allocation. We are, however, mindful that it also means that more money will be available for regional and continental assistance.
Should the increase be accepted as per the Bill, then it will be prudent significantly to reduce the percentage of capital available for nondomestic development to ensure that more funds are available for domestic development. Charity begins at home, hon House Chair. As the NFP, we would prefer to see the Development Bank of Southern Africa focus on improving the lives of all South Africans as its core function and leave regional and continental development to institutions that are funded regionally or continentally.
By approving the increased reach of the Development Bank of Southern Africa, as well as its share capital, we will have a situation where South African taxpayers, indirectly, have to carry all the risk even though the benefit may accrue to other countries. We believe that this is inherently unjust. Thank you, Chair. [Time expired.]
House Chair and hon members, the UDM supports the Amendment Bill.
We support the extension of the mandate of the Development Bank of Southern Africa, DBSA, to provide infrastructure development finance to key infrastructure sectors such as the water, sanitation, energy, transport, education, health and information and communication technology, ICT, sectors beyond the borders of the SADC region, that is, to the rest of the African continent.
This, in our view, will go a long way toward enhancing trade, economic growth, regional integration and development in Africa. We, however, feel that there are several areas of concern to consider.
Firstly, there have been many instances in the past where the work of the Industrial Development Corporation, IDC and the Land Bank clashed with the mandate of the DBSA.
As already indicated earlier, there is the potential that its work could also clash with the mandate and work of the African Bank. This, therefore, requires that we put more effort into refocusing the mandate of all these institutions in order to ensure value for money and to prevent wastage of government resources that results from the duplication of work.
Secondly, the last chunk of DBSA's disbursements goes to municipalities. It therefore follows that while it is prudent not to amend the Act in order to allow the representation of local government or other interest groups, as the committee aptly puts it, we cannot emphasise enough the importance of DBSA forging close relationships with municipalities, as they are its biggest clients.
Thirdly, we welcome the increase in authorised share capital. We, however, hope that by failing to identify certain areas of focus on the continent, we are not spreading ourselves too thinly; because, by biting off more than we can chew, we run the risk of the DBSA not being effective in its infrastructure development programmes, or even worse, finding itself encountering financial difficulties in future.
Ngamafutshane, Mphathiswa, uyayibona ngakumbi into yokungquzulana ngokubhekiselele kumagunya, ufumanise ukuba angquzulana oku kweenkunzi zeegusha zisilwa ngonobenani. (Translation of isiXhosa paragraph follows.)
[In short, Minister, you can see the conflict in relation to mandates, with mandates butting heads like rams fighting over nothing.]
It is something that needs to be addressed because it creates unnecessary tensions ...
... kwindlela ekufanele ukuba afezekiswe ngayo amagunya ... [... in the way mandates should be carried out ...]
... and mandates in particular ... ... zesebe ngalinye. Siyabulela. [... of each department. Thank you very much.]
Hon Chair, the Development Bank of Southern Africa, DBSA, predates our democratic dispensation. Beginning in 1983, the bank promoted economic growth, human resource development, institutional capacity- building and infrastructure creation. After 1996, the new government and the new Constitution required the transformation of the role and function of the bank.
Its area of operation, after 1996, encapsulated all of the Southern African Development Community, SADC, countries. Government reconstituted the Bank to promote, facilitate and fund socioeconomic development in the Southern African region.
Government now believes that it is time for the bank to extend its operation beyond the SADC. This Bill will make it possible for the Bank to operate in other countries in Africa as well as on the oceanic islands.
The bank will therefore have to increase its authorised share capital. Its new mandate will enable the bank to participate in large-scale infrastructure and other strategic projects on the African continent in order to enhance trade.
The bank will support the binational commissions that are in place in order to achieve regional integration. Cope can't argue with the expanded aims and objectives of the Bill. What we are wary of, however, is the general lack of accountability and financial control in all of the institutions in which government has a say.
Banks all over the world are under scrutiny because of the risks taken by them and the greed of their executives. The Minister has a considerable say and, once again, the question arises as to whether regulations will be made and decisions taken on a rational basis or on a narrow political basis.
We will need to keep a beady eye on all developments. The DBSA has a huge challenge of managing both our country's development, financing as well as that of the region and the continent. It will, therefore, have to create good working relations with financial institutions promoting development from each of the Brazil, Russia, India, China and South Africa, Brics, countries in order to mobilise funds on a large scale.
This is why it is so important for the Minister to undertake that he will strengthen the DBSA institutionally. It must fulfil South Africa's obligations to all. Even as we support this Bill, we will continue to demand accountability, transparency and good governance. Thank you.
House Chair, the ACDP wishes to commend the Development Bank of South Africa, DBSA, for its improved performance in moving from a loss of R826 million in the last financial year to a profit of R787 million for this financial year.
This was mainly due to internal changes that were effected, as well as cutting the cost of finance by borrowing from development finance institutions instead of commercial banks.
Now, as we know, the primary mandate of the DBSA is to provide infrastructure development finance in South Africa and to the rest of the continent. The bank indicates that it will commit R1,9 billion to equity investments over the next two to three years. If we consider the huge demand for municipal infrastructure, this additional investment is to be welcomed.
Whilst much of the funding goes towards municipal infrastructure, one of the issues in the committee was, of course, having a representative from the SA Local Government Association, Salga, on the board.
We, in the ACDP are in support of the view that it is not necessary for such a representative on the board as this would open up the possibility of other interest groups also wanting to be accommodated on the board. The current board, in any case, has two members with local-government expertise.
We also support the amendments contained in the Bill that will enable the bank to expand its operations to African countries outside the Southern African Development Countries, SADAC, region. The authorised share capital will be increased from R5 billion to R20,2 billion. This is a significant, I think, 300% increase.
Clearly much vigilance and oversight is required when one is dealing with such large sums funded largely by the taxpayers.
We will also ask that the bank and hon Minister Nene be very circumspect when we have the expansion into the rest of Africa, given the already existing infrastructure development needs in South Africa itself and the SADAC countries, as well as the fact that the bank has only recently succeeded in its turnaround strategy. Also, as the Chairperson indicated, a sober approach is required.
A further concern is, of course, the overlapping areas of jurisdiction with the African Development Bank and the planned Brazil, Russia, India, China and South Africa, Brics, Bank. Mechanisms need to be put in place to manage any conflict or turf issues that may arise. I am sure, hon Minister, you will be looking into such mechanisms.
The ACDP appreciates the concerns that Mr George has expressed about the funds being wasted on parastatals, and we are in agreement with his view on the role of markets and the state. We clearly need to be vigilant about how the DBSA invests its funds.
However, considering that this funding institution has been in existence since 1983, and is succeeding with its turnaround strategy, the ACDP will give it the benefit of the doubt, so please do not disappoint us. The ACDP supports this Bill. Thank you.
Hon Chairperson and colleagues, today we address the problems of the Development Bank of South Africa, DBSA, with regard to the constant recapitalisation of the DBSA and to assess the financial sustainability of this bank.
The importance of maintaining financial sustainability remains important to the DBSA, especially with regard to disbursements made to the local sphere of government, which represents the key operational focus of the DBSA.
The bank's role as a leading catalyst of finance and expertise for infrastructure development also poses constant challenges with regard to capitalisation - and we have just seen the R22 billion extension needed for the DBSA.
We need to know that infrastructure development requires different funding options and the injection of private capital into funds for these developments is critical. I am sure the hon Minister has also alluded to this in the Medium-Term Budget Policy Statement, MTBPS.
The DBSA currently provides bridging finance so that the annual limits over three years can be brought forward as an upfront loan. The DBSA announced that it will return to its core mandate, but recently it has sought to expand into near competitive markets.
We just want to note, hon Minister, that 30% of these disbursements already go to Africa, and extending the territorial mandate was mentioned by other speakers. Last year Treasury decided to inject the further R7,9 billion into the DBSA to support its expansion into major African development projects.
Moreover, South Africa has also pledged a contribution - and this is important - of US$10 billion to the R50 billion balance sheet of the proposed Brics New Development Bank. Our pledge to this bank is the equivalent of one-third of capital in South Africa's entire commercial banking system!
Speaker, if we note the important fact that if Africa's current infrastructure needs will take about R100 billion and the Brics bank is capitalised at R50 billion plus the leverage that we think could be raised on international capital markets, we can see Brics will therefore be, hon Minister, a formidable funding force. Noting this, we see that the bigger Brics bank appears to be a larger duplication of the DBSA.
Hon Minister, financial analysts have indicated that this duplication is entirely avoidable. The possibility of folding the DBSA into the Brics bank should be considered and researched and it will meet much of South Africa's funding commitments to the Brics bank. It will save the Fiscus the cost of the recapitalisation of the DBSA, and the Brics bank will have much healthier credit ratings than the DBSA could achieve.
If we note South Africa's constrained fiscal space with regard to our growth rate at 1,4% and the revised debt to GDP at 48,2%, these are important issues. South Africa's contribution to the Brics bank will amount to 2 billion in cash, dollars; presumably the other 8 billion Dollars will be in the form of guarantees.
The hon Minister indicated in the MTBPS, as I said, that the economy would see a fiscal course adjustment and a different approach to funding the state-owned entities. Hon Minister, it is clear that South Africa cannot afford the losses that have been made by the state-owned entities and we are looking forward to your different approach to funding these state-owned entities.
The fact remains that the DBSA still requires financial backing from the national government and it is certainly a fact that South Africa cannot afford the bailouts and the costly recapitalisation of the DBSA. Considering the hon Minister's speech it is clear that private sector capital must be attracted to developmental finance and the duplications in the banking sector need to be addressed. I thank you. [Applause.]
House Chair, Ministers, Deputy Ministers, Members of Parliament, MPs, and colleagues, it is a well-known fact that in order to bridge the gap between the poor and the rich within our country, the ANC as a liberation movement was afforded an opportunity in 1994 to pursue economic opportunities that would enable it to distribute wealth and pursue inclusive growth and development as its core principle, to address this gap.
That is why the ANC, in order to significantly advance the pace of economic transformation within the country, amplified the role of development finance institutions, commonly referred to as DFIs, as well as state-owned enterprises, SOEs. The DFIs are not created to maximise profits or incur losses; rather their existence is for the purpose of driving the development agenda. The dual mandate of DFIs is to achieve a balance between the required level of self-funding and undertaking developmental projects that the private sector would ordinarily not. We resolve, as the ANC, that there is a need to ensure that these institutions are accessible to the majority of South Africans and are able to effectively channel financial and institutional capacity towards a variety of economic transformation objectives, including industrial diversification and development, while also looking at small businesses and small-scale agricultural initiatives.
However, the most important aspect which is at the centre of this Bill is local and regional economic development, as well as the empowerment of young people and women. You know, Chair, I am a little shocked by the performance perspective of the opposition, the DA. Their performance perspective - notwithstanding the role that we all agree that the private sector should play in the development of our country - does not take into consideration success stories and achievements which have been realised by the Development Bank of Southern Africa, DBSA, in regard to improving the lives of ordinary people.
Hon George and hon Ross, maybe you should be reminded of some of these achievements because I can see that you tend to forget easily that the report on the DBSA, which we entertained recently, indicated the following key achievements, and this really need to be applauded. Our people in Thulamela, which is a municipality, were accorded the opportunity of having a national electrification programme to ensure that 47 815 households would be electrified. I don't know if this is not an achievement to you, but this happened as a result of the intervention of the DBSA.
Maybe if this is not enough to be classified as an achievement, let me indicate that our people in Rustenburg had a pipeline of 9 200 m installed in their constituency as a result of the DBSA's intervention. [Applause.]
Maybe if this is not enough to explain what an achievement is, let me also indicate to you that as part of our commitment to education, at the University of KwaZulu-Natal the DBSA invested R450 million just to approve the issue of a loan that was necessary to supplement grant-funding of R261 million to the university's funding.
That is our commitment to education through the DBSA. I don't know if this is something that cannot be categorised as an achievement according to your perspective. [Interjections.]
In our perspective, there was a commitment through the DBSA to build 49 schools in the Eastern Cape. A total of 32 of those schools have been built and our learners in the Eastern Cape are using those facilities as part of the contribution to the bigger development agenda. [Applause.]
I don't know what it will take for you to comprehend the notion of a success story more appropriately. This is an achievement and it can't be ridiculed.
Anyway, I understand ... [Interjections.] ... why it is not regarded as an achievement by you. Maybe they are not your priority, but they are our priority. We are here to pursue the mandate that has been given to us by them, so to us it is an achievement. [Applause.]
Of course, we will continue to ensure that the private sector comes on board, but it can't be at the expense of our ordinary people. However, it does not imply that when we have some challenges with regard to drawing in the private sector, we should continue to talk negatively about our own institutions because at the centre of some of these negative perceptions is how we as politicians and public representatives talk about these important institutions.
We tend not to pay attention to the achievements that they are realising; instead, we are bringing our own agenda into this whole thing. [Interjections.]
One of the key amendments that have been proposed by the said Bill speaks to one of the most important principles of good governance, which is acquiring appropriate skills that are needed to drive the mandate of the said institution.
There is an amendment here, but I don't know if this amendment wasn't thoroughly explained to us, hon Ross. Why are we simply coming to this podium to articulate on this amendment as if these amendments are not seeking to address the concerns that you are raising or the concerns that were raised during the committee's deliberations?
With regard to the issue of cronyism as articulated by hon George, the amendment is specific about the required skills needed in order to drive the institution. It is addressed by this particular provision. Now why all of a sudden do we come here and talk as if there is nothing that is being done to address some of these challenges?
As part of these amendments, the Bill seeks to deal with the issues of good governance because, as the ANC, it is our belief that good governance informs the ethos of the way the DBSA and other institutions should carry out their business.
The bank endeavours to maintain the highest standard of integrity and ethical conduct and keeps abreast of new developments in the field of governance, hence this Act regulates the appointment of directors and the DBSA Board. The Act charges the shareholder with appointing directors based on their abilities in relation to socioeconomic development, finance, business, banking or even administration.
So I am not sure where cronyism comes in here, because this is a very, very clear articulation on how we are going to deal with the issue of the required skills to take the DBSA, as an important institution, forward.
Hon Chair, in order for the DBSA to deliver its expanded mandate, significant changes to its business model were definitely required, as well as a capital injection to rebuild its capital base. There is one hon member of the opposition here who indicated that there is no need for us to expand on measures which will help us to increase our financial base. If you agree with us that in order for South Africa to develop we also need regional development, then we definitely need to expand our financial base so that we are able to carry our mandate without any financial hindrance.
Therefore, as part of these amendments, the Act definitely seeks to enhance and enable the Minister to increase authorised share capital with the DBSA; to enable further increases in addressing the growing demand for infrastructure funding; and to enhance the DBSA's capital base - which is very, very important - in order for it to carry out its mandate.
At times, hon members, I am not sure how we approach these debates, because if we agree in the committee that the issue of the funding model of state- owned enterprises is something that needs to be reviewed, I thought all of us would wait for that opportunity when we are deliberating seriously on the review of this funding model. Also, we have called ... This morning, when we confirmed in the committee meeting, there wasn't one submission, not even from the opposition, on what it is that needs to be researched to ensure that we had a successful debate on the review of the funding model of the DFIs. However, we also indicated that we should be patient. The time will come for us to be taken on board about nonstrategic assets, which of course will be done away with. So, I am not sure why you are coming here now and raising this as if it was never deliberated and resolved in our committee meeting.
Hon member, your time has expired.
As the ANC, we support the amendments ... [Interjections.] ... because they are necessary for the development of our beloved country and the continent. Thank you, hon House Chair. [Applause.]
House Chair, I would like to thank the committee for the work they have done to approve and process this important piece of legislation, the amendment to the Development Bank of Southern Africa Act.
The Development Bank of Southern Africa, DBSA, that we are talking about is an institution that has built its asset base from a mere R250 million to what it is today at R60 billion. So Anybody who has any doubts that the institution that we want to approve today, that this extension of its mandate has been underperforming, is delusional if not suffering from a disease that would be unparliamentary for me to mention. In general, I want to say to members who are raising issues about the DBSA's role at home, in the municipalities we have evidence that the DBSA has done extremely well in this space and it will continue to do so. Actually, the amendment to extend its authorised shared capital also covers that area. It's not only intended to finance the DBSA's expansion of its mandate.
Hon Chair, let me indicate one of the things that some members, including the hon George, who I thought had spent a bit of time in the committee, focused a lot of attention on. This time around he completely disappointed me. He didn't read the definitions. If we say, amongst the proposed new amendments on the existing definitions for the board, clause 1 of the Bill - if you haven't read clause 1 of the Bill, then what part of the Bill have you read? It includes definitions of authorised share capital, callable capital and issued share capital.
Authorised share capital, hon George, is the maximum capital the Bank may raise. It consists of the issued share capital and the callable capital. [Interjections.] I am just doing this for your benefit, knowing that if you didn't explain this to your other members it would be beneficial for them to listen to this part rather than talking on the side.
The issued share capital is that part of the authorised share capital that is issued. And the callable capital is the authorised share capital less the issued share capital. So all these definitions have been included in order to be able to clarify what it is that we seek to do.
The shareholder here is currently the state and we propose that it must approve a request by the Bank to take up any part of the authorised share capital which is not yet issued. Therefore, we are saying that we indeed, as hon members, have raised this. We will be circumspect in making sure that it invests in projects that actually do make sense - unless you are questioning the rationality of the shareholder.
Again, in explaining callable capital, we must also explain that this is a key tool for the bank to leverage the ratio for loans.
You also talk about the DBSA as if it is a company, hon George. It is not a company in terms of the Companies Act, as you have indicated. Its name was only entered on the register of companies in order to avoid the use of its name by other companies - that was the only reason, and it is for that reason that we say now that that part has actually been dealt with.
Hon members have indicated that it predates our democracy, but it has been transformed in the process up to this point. Again, we actually take note of the points made by members where they say we should make sure that these investments also didn't have an overlap - as Mr Kwankwa said - of mandates. We say that the African infrastructure gap is close to R100 billion, as, I think, Adv Swart or Mr Ross mentioned.
The fact of the matter is that is a huge gap, so that is actually to complement all other efforts of augmenting infrastructure on the continent. And that's the space that the DBSA is going to be playing in.
We therefore think that it's playing in a space where we are also shareholders, be it in the Brics' New Development Bank or the African Development Bank. South Africa also is a player in that space so there will be no overlap of mandates.
Indeed, it is our aim to make sure that we crowd-in the private sector. The fact of the matter is that, as government, we also have a responsibility to look after the interests of the millions of South Africans in addition to making sure that the private sector plays its role. We also would want to commit ourselves to this House to say that there will be no carte blanche for the bank to move into any country outside of the SADC region, because it would require ministerial approval and a plan of activities that we will approve on an annual basis as to how this will be done.
With those few words, and ignoring all other matters that did not relate to the DBSA Amendment Bill, I wish to thank the committee for the work that they have done.
Chairperson, on a point of order: I don't know what is happening. This is disruption. Are they showing no confidence in the Minister?
No, hon member, just take your seat.
It's disruptive. Why is the DA walking out like this? The Minister is mentioning something important.
Hon member, take your seat. I was going to address that issue as soon as the Minister was finished.
Thank you. It is for that reason they showed no confidence when they sat on this side. I hope you also realise that you might also be showing a bit of no confidence. But thank you very much for raising your point of order.
Thank you very much, Chairperson. And, once again, as I said, the committee has actually helped us to take this very important step of moving into Africa, of making sure that we participate in the infrastructure development of our continent and at home in the municipalities. Thank you very much. [Applause.]
Hon members, on the point of order that the hon member raised, I was aware that there was a lot of movement on my left-hand side. May I request the Whips to ensure that we maintain the decorum of the House, that when members leave the Chamber, they do so quietly and not disrupt the speaker at the podium. It's very difficult to follow what the speaker is saying when there is so much movement. So, let's just maintain the decorum and would just ask the assistance of all the Whips in this regard.
Debate concluded.
Question put: That the Bill be read a second time. Division demanded.
The House divided.
AYES - 166: Abrahams, B L; Adams, F; Adams, P E; Basson, J V; Bekwa, S D; Beukman, F; Bhengu, F; Bhengu, N R; Bilankulu, N K; Bongo, B T; Boroto, M G; Buthelezi, M G; Capa, N; Carrim, Y I; Cele, M A; Chohan, F I; Chueu, M P; Coleman, E M; Cronin, J P; Davies, R H; Dlakude, D E; Dlamini-Dubazana, Z S; Dlulane, B N; Dunjwa, M L; Esterhuizen, J A; Faku, Z C; Fubbs, J L; Gamede, D D; Gigaba, K M N; Gina, N; Jeffery, J H; Kalako, M U; Kekana, P S; Kekana, M D; Kekana, E; Kenye, T E; Khoarai, L P; Khosa, D H; Khoza, M B; Khoza, T Z M; Khubisa, N M; Koornhof, G W; Kubayi, M T; Kwankwa, N L S; Lesoma, R M M; Letsatsi-Duba, D B; Loliwe, F S; Luyenge, Z; Luzipo, S; Mabasa, X; Mabe, B P; Mabija, L; Mabilo, S P; Madlopha, C Q; Maesela, P; Mafolo, M V; Mafu, N N; Magadzi, D P; Magwanishe, G; Mahlalela, A F; Mahlangu, D G; Mahlangu, J L; Mahlobo, M D; Maila, M S A; Makhubele, Z S; Makondo, T; Makwetla, S P; Malgas, H H; Maluleke, J M; Manamela, K B; Manana, D P; Mandela, Z M D; Mantashe, P T; Maphatsoe, E R K; Mapulane, M P; Martins, B A D; Masango, M S A; Masehela, E K M; Maseko, L M; Mashile, B L; Masondo, N A; Masutha, T M; Mathale, C C; Matlala, M H; Matshoba, M O; Matsimbi, C; Mavunda, R T; Maxegwana, C H M; Mchunu, S; Mdakane, M R; Memela, T C; Mkhize, H B; Mkongi, B M; Mmemezi, H M Z; Mmola, M P; Mmusi, S G; Mncwango, M A; Mnganga - Gcabashe, L A; Mnguni, D; Mnguni, P J; Mnisi, N A; Mogotsi, V P; Mokoto, N R; Molebatsi, M A; Moloi-Moropa, J C; Morutoa, M R; Mosala, I; Mothapo, M R M; Mpontshane, A M; Mpumlwana, L K B; Msibi, V Z; Msimanga, C T; Mthembu, N; Mthethwa, E N; Mthethwa, E M; Mudau, A M; Muthambi, A F; Nchabeleng, M E; Ndaba, C N; Ndongeni, N; Nene, N M; Nesi, B A; Ngcobo, B T; Nkadimeng, M F; Nkwinti, G E; Nobanda, G N; November, N T; Ntombela, M L D; Nyalungu, R E; Oliphant, G G; Oosthuizen, G C; Pandor, G N M; Phaahla, M J; Phosa, Y N; Pikinini, I A; Pilane-Majake, M C C; Qikani, A D N; Radebe, G S; Ralegoma, S M; Ramokhoase, T R J E; Rantho, D Z; Raphuti, D D; Semenya, M R; Shope-Sithole, S C N; Sibande, M P; Singh, N; Sithole, K P; Siwela, E K; Sizani, P S; Skosana, J J; Smith, V G; Surty, M E; Thabethe, E; Tleane, S A; Tobias, T V; Tom, X S; Tongwane, T M A; Tseli, R M; Tsoleli, S P; Tsotetsi, D R; v R Koornhof, N J J; Van Rooyen, D D D; Van Schalkwyk, S R; Xego-Sovita, S T; Zokwana, S; Zulu, L D.
NOES - 9: George, D T; Mabika, M S; Maimane, M A; Masango, S J; Mncwabe, S C; Ross, D C; Shaik Emam, A M; Steenhuisen, J H; Waters, M.
As the result of the division showed that there was not a majority of the members of the National Assembly present for a vote to be taken on a Bill as required by Rule 25(2)(a), decision of question postponed.