DBSA CEO Boitumelo Mosako speaking after the conclusion of the African Development Bank (AfDB) Africa Investment Forum on Friday. Picture: Supplied
The Development Bank of Southern Africa (DBSA) has reported an overwhelming positive response from African investors looking to finance sustainable and bankable infrastructure projects focused on clean water supply across the continent.
This development follows the establishment of the Water Partnership Office (WPO), a collaboration between the DBSA, the Department of Water and Sanitation, and the South African Local Government Association (Salga).
The WPO is designed to bolster municipal efforts in forging partnerships with the private sector to accelerate the delivery of essential water and sanitation infrastructure throughout South Africa.
Water infrastructure refers to all types of infrastructure that is water-related, from water supply to treatment, storage, water resources and management.
According to research, about 25% of households in South Africa do not have access to piped water and 16% of households do not have access to improved sanitation services.
As the mandated implementing partner, the DBSA is keen to harness this partnership strategy to enhance the efficiency and effectiveness of operational frameworks dealt with these critical projects.
Speaking after the conclusion of the African Development Bank (AfDB) Africa Investment Forum on Friday, DBSA CEO Boitumelo Mosako said the DBSA was actively seeking to mobilise private sector financing to support social infrastructure within the country.
Highlighting the strategic importance of water infrastructure, Mosako pointed out that key projects from eThekwini have been identified as prime candidates for investment.
“This is not the first Water PPP that the DBSA is doing, by the way. We've done quite a few before. So for us, because what the PPP does, they also bring that element of efficiency from an operational perspective. So, that's what we're looking to do with these PPP structures,” Mosako said.
“In Operation Vulindlela as well, one of the reforms is to really support that as well. So, that's what we want to move towards so that we can enhance the new build and the maintenance of infrastructure as well.
“The DBSA has raised $235 million (R4.3 billion) from the Global Green Facility to support water reuse projects in South Africa, $200m of that going towards projects and $35m going towards project preparation. So, we are mobilizing financing and we’re also getting the private sector to participate.”
Meanwhile, the DBSA together with the AfDB and key institutional investors Academy Securities, Africa50, and Newmarket, on Friday signed a Letter of Intent to explore the establishment of a multi-originator synthetic securitization transaction.
“It is imperative that multilateral development institutions, asset managers, and institutional investors work as a system to scale up financing available for Africa’s growth,” Mosako said.
Building on the success of the AfDB’s inaugural $1 billion synthetic securitization transaction in 2018, the proposed multi-originator synthetic securitization platform is being designed as a revolving, evergreen vehicle to de-risk the balance sheets of development finance institutions operating in Africa, while providing attractive investment returns for private sector participants.
The platform aims to feature a combined reference portfolio of approximately $1.5-2 billion in assets diversified across sectors, geographies, and risk profiles.
It will include loan and guarantee exposures that align with the AfDB and DBSA’s shared strategic priorities, particularly in climate finance, infrastructure, and financial intermediation. The composition reflects a more granular and well diversified pool of assets to appeal to a broad spectrum of investors.
AfDB President, Dr Akinwumi Adesina, said the multi-originator synthetic securitization platform sought to transfer a mezzanine tranche credit risk to private sector investors while retaining senior tranche risk within the originators to allow the AfDB and DBSA to unlock additional lending capacity for high-impact development projects and provide regulatory capital relief on a revolving basis.
"The proposed multi-issuer securitization vehicle we are shaping – just like with SDR rechanneling through hybrid capital and other innovations we continue to explore - exemplifies how collaboration between multilateral development banks and private sector investors can unlock transformative capital flows to address Africa’s financing gaps,” he said.
The Africa Investment Forum 2024 Market Days has recorded a total of $29.2bn in new investor interests after three days of boardroom discussions.
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