RURAL DEVELOPMENT & URBAN RENEWAL DBSA PRESENTATION TO PARLIAMENTARY JOINT BUDGET COMMITTEE 2 NOVEMBER 2004 DBSA

Introduction The purpose is to present DBSA perspective on rural development and urban renewal in SA. This is done in the context of MTBPS presented on 26 October 2004. MTBPS places great emphasis on infrastructure investment. DBSA’s mandate is focused on infrastructure development. DBSA

Outline MTBPS issues About the DBSA Rural development & urban development focus DBSA intervention and support Conclusions DBSA

Need to Focus on Rural Development & Urban Renewal While 10 year reviews show consistent positive progress, there are still major challenges to improve the 2nd economy in the next decade. The challenges of the 2nd Economy hinge on underdevelopment of rural areas, townships, inner city and informal settlements. There is a need to refocus public and private investments in rural development (RD) and urban renewal (UR) - in order to build sustainable economies. DBSA

MTBPS Issues Some of the pertinent issues raised in the MTBPS include: Large increases in future spending occurs in welfare and social security (12,7%), telecoms and transport (9,7%) and health services (9,6%). TnT on areas with economic potential Welfare and health on 2nd economy Shifting more resources to provincial and local government, where rural development and urban regeneration is being implemented. DBSA

MTBPS Issues (cont.) Integrating formal and informal sectors through: Expanded Public Works Programme Skills development Land reform and agricultural support programmes This is a reiteration of previous statements by government. Need for improved integration DBSA

MTBPS Issues (cont.) Municipal Infrastructure Grant to provide substantial resources for water and sanitation: These services are still problematic in the 2nd economy Backlogs in sanitation are mainly in rural provinces. The 2005 budget is to step-up investment in roads, dams and housing. Revenue collection prognosis looks good to allow this. DBSA

MTBPS Issues (cont.) Migration from rural areas to urban areas gaining momentum. Natural phenomenon to e planned for: services in urban areas, and empowerment in rural areas. Economic priorities include economic infrastructure, industrial development and land reform. There dedicated DFI’s for each of these sectors: DBSA, IDC and Land Bank respectively DBSA

MTBPS Issues (cont.) Tax incentives for rejuvenation if inner city, where 15 municipalities have been nominated in designated areas. Incentives to encourage investment in productive assets, R&D and deductibility of start-up costs. This need to be integrated with other interventions, e.g. Project Consolidate, presidential nodes etc. DBSA

About the DBSA: Vision To further the progressive realisation of an empowered and integrated region, free of poverty, inequity and dependency. To be a leading change agent for socio-economic development in Southern Africa. DBSA

About the DBSA: Mission To maximise our contribution to development by mobilising and providing finance and expertise and by establishing partnerships to develop infrastructure to improve the quality of life of the people of southern Africa DBSA

About the DBSA: Triple Role FINANCIER: To contribute to the delivery of basic services and promote economic growth through infrastructure funding ADVISOR: To build institutional, financial technical and knowledge capacity for development PARTNER: To leverage private, public and community players in the development process DBSA

DBSA Perspective on RD & UR Focus of RD & UR is required on: Areas with service backlogs; Areas that are spatially and economically marginal, but with potential; Areas in which social exclusion continues to limit development of the communities (people pillar of sustainable development). DBSA

Challenges Need for greater common understanding of objectives of rural development & urban renewal: Different objectives for rural development and urban renewal in different nodes Lack of coordination at planning level Need focused approach across sectors and spheres of government. DBSA

Challenges (cont.) NATIONAL SPHERE ISRDS & UR PROVINCIAL SPHERE Prov Dev Strategies LOCAL SPHERE IDPS DBSA

Challenges (cont…) Budgets don’t match need & access difficult: In the MTEB, ISRDP and UR programmes not explicitly budgeted for by DPLG. It is estimated that it will require about R22 billion per annum to close household income gap in the 13 rural nodes. Also, funds difficult to access – slow approval; matching funds from other departments not readily available. DBSA

DBSA Interventions & Support DBSA is both directly and indirectly involved in RD & UR through its triple role DBSA

DBSA Role Financier: The Bank finances municipalities – but limited by risk profile and municipality’s capacity to absorb loan. Since 1994, approved loans and equity of R25 billion (resulting in total project value R83 billion). No. of projects 1030 No. of households benefiting 4 million No. of jobs created 527 000 GGP impact R63,5 billion Vision 2014 challenges us to redouble efforts DBSA

DBSA Role Partner: The Bank partners and supports, inter alia, the following: DPLG on broad policy development, Vuna Awards, and Project Consolidated DPW on extended public works programme (EPWP) in project management. SALGA: local government capacity building through its LGRC and LGNET. IDT and ARC on implementation of ISRDP. Universities through Vulindlela Academy DBSA

DBSA Role Advisor: Since 1994, the Bank has approved capacity building grants of more than R100 million. The Bank’s advisory role included technical assistance, knowledge support and agency services. The DBSA Development Fund also provides capacity building grants to municipalities (including ISRDP and UR nodes). DBSA

DBSA Role (cont.) Following last year’s hearing, The Bank established a Rural Development Forum, which enables DBSA Rural Development Team to share information with partners. The Forum coordinates publication of South Africa Rural Development Quarterly (SARDQ): to provide fresh thinking on rural development issues Rural Monitor: monthly review of what print media reports about rural issues DBSA

Conclusion The MTBPS provides, over MTEF, a good basis to extend focus on the improvement of the 2nd economy. This is reflected by a distinct attention to allocating more resources to infrastructure development. This will further enable DBSA’s effort to leverage government and other agencies to further deepen interventions in rural development and urban renewal DBSA

Thank you DBSA