DEVELOPMENT BANK OF SOUTH AFRICA

- Investor

- Partner

- Advisor

RURAL & URBAN DEVELOPMENT

DBSA PRESENTATION TO PARLIAMENTARY JOINT BUDGET COMMITTEE

14 NOVEMBER 2003

1. Introduction

· The purpose is to present DBSA perspective to rural and urban development needs in SA.

· This is done in the context of MTBPS presented on 12 Nov 2003 and Presidential address to NCOP on 11 Nov 2003.

· Outlines

- PA:NCOP & MTBPS issues

- About the DBSA

- Rural & Urban development focus

- DBSA intervention

- Conclusions.

2 PANCOP & MTBPS ISSUES

· The PA:NCOP raised the puzzle of 'Marginalised or 2nd Economy', which comprises mainly rural areas, townships, and informal settlements (cages of poverty and unemployment).

· The anticipated future economic prosperity will depend mainly on meaningful contribution of these economies.

· Hence, the need to refocus public and private investment to rural development (RD) and urban renewal (UR) - in order to build sustainable economies.

· Employment creation through EPWP and increased

infrastructure spending

- Will improve access & linkage with 1st economy

+ Need better targeting to marginalised (or 2nd ) economy

· Expansion of social services

· Tax incentive for urban development

+ Need equivalent tax incentive for rural development

· Land restitution and reform

+ Need critical evaluation of position of agric in the economy

Progressive shift of resources to local level

- Increased delivery

+ Need to support local institutional & human capacity

· MIG need to present specific facilities for RD & UR.

 

3. ABOUT THE DBSA

3.1 VISION

To be a leading change agent for socio-economic development in Southern Africa

3.2 MISSION

To contribute to development by mobilising and providing finance and expertise and by establishing partnerships to develop infrastructure, in order to improve the quality of life of the people of Southern Africa.

3.3 STRATEGIC THRUSTS

· Becoming a knowledge based institution

· Delivering services

· Promoting business growth through innovation and responsible

risk

· Accelerating the delivery of financial and non financial services in an efficient and integrated manner

· Providing financial resources and expertise for excellence in delivery

· Increasing the Bank's involvement in the poorest areas

· Building and maintaining strong strategic partnerships to maximise development impact

· Recognising and rewarding performance in relation to specific deliverables

· Continuing the Bank's transformation by building on the past and aligning for the future

3.4 DBSA - TRIPLE ROLE

· INVESTOR:

- 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

The DBSA

· Recognises importance of urban renewal and rural development for accelerating sustainable development.

· Also appreciates intentions of the Integrated Sustainable Rural Development Program (ISRDP) and The Urban Renewal Program (URP)

· Further recognises role played by other sister organisations and government in rural development and urban renewal.

4. The focus of RD & UR is required on:

areas with service backlogs;

· Areas that are spatially and economically marginal;

· areas in which social exclusion continues to limit development of the communities.

THUS

· Urban renewal and rural development focus on overcoming:

-imbalances in levels of development, wealth, income and opportunity; and

-more contemporary problems of deepening unemployment and poverty resulting from decline of traditional employment sectors.

4.1 PRINCIPLES

· Bottom-up, people-driven approach to development facilitated by local government through the lDP

· Synergy with existing development programmes while encouraging involvement of new complementary programmes

· Focus on clusters of poor communities located areas smaller than that of a municipality

· Balanced approach but with emphasis on economic development to ensure sustainable poverty alleviation

· Decentralised decision-making and participation at levels-below that of municipal government

· Responsiveness to community demand

· Integration of development initiatives

· Emphasis on human, social and economic development to empower people and communities

· Focus on partnerships to enhance collective resource utilisation, thus promoting social and economic development

4.3 GAPS & CHALLENGES

Incomplete consolidation of institutional, planning and programmatic preconditions

- Government-wide systemic and capacity constraints

- Policy framework/strategic guidelines still under construction at DPLG

· Lack of common understanding of objectives of rural development & urban renewal

- Different interpretation of urban renewal in different nodes - need common understanding of objectives

- Need shared and consistent position regarding the role structure and Operation of the urban renewal programme

· Lack of co-ordination at planning level

- Need focused approach across sectors aid spheres of government

- lDPs not yet achieving integration of objectives (or at least co-ordination of outputs)

- Resource, knowledge and capacity constraints in the short run

· Limited linkages to IDPs:

- Initial projects not part of DR process ("teething problem") - potential non-strategic use of resources.

· Strategic goal and partnerships:

- Projects identified by communities now starting to feature in programmes.

- Meaningful partnerships with private sector, NGOs, civic formations and

others often still in formative stage.

· Urban renewal and rural development in isolation:

- Should together support Provincial Growth and Development Strategies

- Currently apparently independent. and limited links with other initiatives

- Affects long-run sustainability

· Urban renewal applies to a designated node:

- Implications of integrated support for designs tee nodes and issues at municipal level

- Potential for locations outside of node to be ignored

· Implementation slow and patchy:

- Inadequate capacity to undertake large programmes

- Demands of other important initiatives e.g. municipal restructuring and IDP processes

- Resource constraints exacerbated by meeting RDP operational expenditure incurred over past seven years

- DPLG also facing capacity constraints

· Inadequate participation:

- Envisaged broad-based participation not always forthcoming - light schedules encouraged use of consultants instead

· Budgets don't match need & access difficult:

- DPLG budget for URP and ISDRS 2002/3 R1,5b; 2003/4 R2.3b, 2004/5 R2,7b

- lnanda/Ntzuma/Kwamashu atone need approx. R6b

- Also, funds difficult to access - slow approval, matching funds from other departments not readily available

5. DBSA SUPPORT

DBSA is both directly and. Indirectly involved in RD & UR through its triple role

· INVESTOR:

- Metro and other councils - but limited by risk profile and municipality's capacity to absorb loan

· PARTNER: inter alia

- DPLG: broad policy support

- DPW: support extended public works programme

- SALGA: local government capacity building & develop sustainable economic strategies

- NHFC: complementary initiatives

- IDTIARC: ISRDP support

- Nat Treasury - management of municipal training fund etc

· ADVISOR:

· Grant support - launch of urban renewal programmes (EC)

· Proposed grant fund to assist municipalities develop and establish an indigent facility directly combating poverty impact.

· Development Fund capacity building support to nodes

· Prioritised provinces of Eastern Cape & Limpopo

6. CONCLUSION

· The marginal areas and second economy are characterised by a high incidence of poverty and unemployment.

· The targeted nodes are still isolated from and are not complemented by the adjacent economic opportunities.

Need to enhance institutional capacity to absorb development funds - and create synergy with municipal system.

· Rural and urban development need to move beyond physical to human development.

· Integration and co-ordination of interventions still

Mulalo!!

Peace