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.]