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.]