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.