DBSA Project Preparation Fund

Title DBSA Project Preparation Fund
E-mail, phone number and mailing address

Development Bank of Southern Africa
Headway Hill
1258 Lever Road
Midrand
South Africa

Tel: +27 11 313 3911

Email: ppfinfo@dbsa.org

Facility URL www.dbsa.org
Facility Objectives

DBSA seeks to promote economic and social development by mobilising financial and other resources from national and international private and public partners for sustainable development projects in South Africa, the SADC region and the broader African continent.

The bank’s mission is to advance development impact by expanding access to development finance and effectively integrating and implementing sustainable development solutions to: 

  • Improve the quality of life of people through the development of social infrastructure, 
  • Support economic growth through the investment in economic infrastructure, 
  • Support regional integration, and 
  • Promote the sustainable use of scarce resources.
Key activities
The DBSA Project Preparation Fund supports infrastructure projects through funding the preparation of projects that fall short of the needs of both the public and private sector, as in most cases sponsors do not have funding available to prepare projects to investment stage. As a DFI, the DBSA is positioned to take on early-stage risk where commercial banks are reluctant to take on this risk.
Preparation support in this context can be defined as financial support to create capacity and guidance to prepare projects for investment, by the public and private sector or a combination thereof. 
The DBSA Project Preparation Fund utilises funding from strategic partners and/or 3rd party funds it manages for the more risky, early stage preparation activities and its own funding for late stage projects.  This approach allows the DBSA to take unique, catalysing investment positions in order to be able to “crowd-in” 3rd party capital. 
Type of finance provided

Loan; debt; equity (decided on a project-by-project basis)

Size of project supported

Larger, scalable infrastructure projects with a high developmental impact are preferred.

Range of funding provided (min/max)

This is dependent on a project-to-project basis, depending on available funding as well as the risk and returns of the project. 

Beneficiaries supported

Eligible public sector parties (such municipalities, state owned entities, government departments and regional bodies such as the Southern African Power Pool) or private institutions who have obtained a licence/concession on a competitive basis from a government that is within the DBSA’s mandate. 

Project type

Regional; cross-border; national; sub-national. The Project Preparation Fund actively pursues projects with a high development impact, a suitable commercial return and/or both. Projects with a high development impact are normally within the municipal and social sectors within South Africa and those attracting a commercial return are usually embarked on by state owned entities and/or  are private sector led (within South Africa, SADC and selected Sub Saharan Africa). 

Project preparation phases supported
  • Enabling environment (designing enabling legislation; designing regulatory approaches; projecting relevant institutional reforms; consensus building for projects).  The support given here will be related to specifically unlocking projects; 
  • Project definition (identification of desired outputs; action planning; terms of reference, etc; pre-feasibility studies);
  • Project feasibility (organisational/administrative; financial modelling; economic, social, technical/engineering and environmental studies);
  • Project structuring (public/private options assessment; technical/engineering; project finance and legal structuring);
  • Transaction support (legal structuring; procurement; negotiation and post-signing financial agreements).

(This is a non-exhaustive list of project preparation activities supported) 

Application process
All interested applicants should complete the online application form at www.dbsa.org or https://ppf.dbsa.org/ and provide the required documentation and all relevant supporting information as required. 
Only project applications submitted through the online application form will be accepted by the DBSA (application guidelines are also available on the web site).
Eligibility exclusions
  • Co-funding: Project sponsors & developers are required to fund a significant portion of the requested project preparation amount. Any historical costs incurred by the project sponsor will not be eligible to be included as their contribution to the required funding.
  • Return based approach: The DBSA will seek to recover the project preparation funding provided for projects which are determined to be bankable. The DBSA will provide project preparation funding on commercial terms for private sector led infrastructure projects and seek to recover the capital and earn the return on financial close. On funding to municipality-led infrastructure projects, the DBSA seeks to earn affordable returns on the funding provided; this could be achieved through blending DBSA funds with concessionary/grant funding from strategic partners.
  • Other: The DBSA will seek to act as the Mandated Lead Arranger (MLA) for the projects for which it has provided project preparation funding and to arrange the debt funding for the project on a best efforts basis, provided that the commercial terms of the appointment are competitive and market-related. 
  • Cost exclusions: Certain costs (e.g. debt service charges, currency exchange losses, salaries, travel & accommodation) shall not be considered eligible for funding through the DBSA Project Preparation Fund.
Countries Angola, Botswana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Democratic Republic of Congo, Seychelles, Tanzania, Zambia, Zimbabwe
Sub-Sectors

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