DBSA’s Transport focus...2 • The DBSA is a leading Africa Development Finance Institution, with...
Transcript of DBSA’s Transport focus...2 • The DBSA is a leading Africa Development Finance Institution, with...
DBSA’s Transport focus “Transforming the Southern African transport sector across the value chain for development impact” October 2017
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SUMMARY SLIDE
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• The DBSA is a leading Africa Development Finance Institution, with a focus on the infrastructure sector. DBSA’s mandate fits in to the national (RSA and other SADC countries’) infrastructure sector policy and plans.
• Transport is one of its key mandate sector. • The DBSA leverages its activities across the infrastructure value chain to provide an integrated value
offering for our clients – from project preparation to implementation • The DBSA facilitate capital flows toward development priorities in response to market and coordination
failure • Lack of local industry, materials and labor hinders infrastructure development due to (1) lack of
(integrated) design, construction & maintenance capabilities; (2) restricted and expensive access to materials & equipment and (3) limited access to trained labor.
• Government and SOE’s plan to spend R327bn on Transport and logistics in the medium term 2017/18 –
2019/20
• New financing solutions and approaches to infrastructure can lead to unlock new local industry opportunities for the region.
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Agenda
1 2 3
DBSA overview
The Southern African Infrastructure landscape
DBSA initiatives across the region
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THE DBSA IS A LEADING AFRICA DEVELOPMENT FINANCE INSTITUTION, WITH A FOCUS ON THE INFRASTRUCTURE SECTOR
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KEY POINTS
• DBSA 100% owned by the SA Government, reporting into the National Treasury
• Mandate – Covers entire African continent; focus on Southern Africa
• Financially sound – R84bn Assets, R32bn Equity, R3Bn+ sustainable profits
• Externally rated – DBSA foreign currency rating is Baa3 (Moody’s) – similar to Sovereign
• Well governed – Achieved unqualified audits; A+ rating from AADFI PSGRS
• Globally accredited – Global Environmental Facility, Green Climate Fund, EU 6-pillar
Mission Promote economic growth, improve quality of life and advance regional integration via infrastructure investment
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OVERVIEW OF THE DBSA’S PRODUCTS, SERVICES AND SECTORS
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DBSA’s primary market DBSA’s main focus outside of SA DBSA’s secondary (and recent) focus outside of SADC
GEOGRAPHIC FOOTPRINT PRODUCTS & SERVICES
The DBSA mostly lends to its clients directly, but also provides financing to financial institutions (particularly outside of SA)
SECTORS
Primary: Energy, Transport, ICT, Water & Sanitation Secondary: Education, Health
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THE DBSA LEVERAGES ITS ACTIVITIES ACROSS THE INFRASTRUCTURE VALUE CHAIN TO PROVIDE AN INTEGRATED VALUE OFFERING FOR OUR CLIENTS
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Plan Prepare Finance Build Maintain/ Improve
1 2 4 5
Set-up infrastructure programmes (e.g. REIPPP, student housing)
Finance project preparation activities (technical studies) using DBSA and third party funds (e.g. IIPSA, PPDF)
Balance sheet (recourse) loans
Limited/non-recourse lending
Mezzanine finance/ subordinated debt
Structured financing solutions
Equity (historical book)
Guarantees
Manage design and construction of key projects
Project management Support
DBSA municipal funded project implementation support
Deliver & support the development, maintenance, improvement of key infrastructure projects
Develop sector and regional master plans for clients, to enable project development and financing
In-house capability to support under resourced municipalities
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DBSA’S STRATEGIC RESPONSE…WE’LL DELIVER EVEN GREATER LEVELS OF DEVELOPMENT IMPACT, BUT THROUGH A BROADER SET OF PRODUCT OFFERINGS
Sources of Competitive Advantage:
Mission: Advance development impact in Africa via infrastructure – promote economic growth, improve quality of life and regional integration
Develop structured products and
funding structures to unlock
infrastructure and crowd-in 3rd parties
Paths to Victory:
De-risk project finance structures to crowd-in third
party funding
Greater investment in early-stage
programme and project
development
Establish project management
offices and focus on maintenance of
public infrastructure
Integrated infrastructure
solutions, including early-stage risk and delivery capability
Strategic partnerships Greater risk-return trade-off and longer
tenors
Access to concessionary
financing
Continue core long-term
infrastructure lending activities
Strategic Ambition:
Catalyse R100Bn annually in infrastructure by 2019-20, while maintaining financial sustainability
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FACT: LACK OF INDUSTRY, MATERIALS AND LABOR HINDERS INFRASTRUCTURE DEVELOPMENT
Lack of (integrated) design & construction &
maintenance capabilities
Restricted and expensive access to materials &
equipment Limited access to
trained labor
Issue
Impact
Countries facing low construction sector productivity • Lack of planning • No/ limited access to finance • Highly dependent on
international service providers
Appropriate, skilled workforce not available
• Vast array of different skills required
• Specialized skills often not available or expensive
• Low competitiveness of national industry
• Infrastructure backlog • Block industry growth, e.g.
Indonesia lacking financial & technical capabilities thus unable to internationally expand gas sector
High costs for materials & equipment
• Costs of raw materials dependent on region
• Lack of infrastructure increases transport costs
• Lack of efficient technology result in inadequate use of materials
• Fly-in-fly-out of staff to complement local staff is costly and has negative social impacts
• e.g. container of construction materials costs $2K from China to Kenya, but another $6K for 900 miles from Kenya to Kigali
• e.g. delay of six-laning of Indian NH 1 between Panipat & Jallandhar due to lacking raw materials
Source: WEF; BCG; Laboursta, IHS Global Insight
Enabling the local industry for infrastructure also increases the civil society acceptance of infra projects
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Infrastructure drives large improvements in developmental outcomes
Source: Research summarized in Agenor and Moreno-Dodson (2006), and Public-Private Infrastructure Advisory Facility (PPIAF) PPPs: An Introduction, NEPAD
Better transportation increases access to healthcare • Building rural roads increased doctors visits in Morocco • Paved roads associated with lower infant and female mortality rates
Ethiopia road upgrades resulted in significant gains in agriculture sector
• Yields/ha increased by ~100-200% within 18 months
Better transportation raises school attendance • Building rural roads in the Philippines increased school enrolment
by 10% and reduced dropout rates by 55% • Paved roads have doubled girls’ school attendance in Morocco
Healthcare
Agriculture
Education
LACK OF INDUSTRY, MATERIALS AND LABOR HINDERS INFRASTRUCTURE DEVELOPMENT - OUTCOMES
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AGENDA
1 2 3
DBSA overview
The Southern African Infrastructure landscape
DBSA initiatives across the region
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THERE ARE A NUMBER OF GLOBAL, REGIONAL AND NATIONAL PLANS AND INITIATIVES WHICH GUIDE THE DBSA’s DEVELOPMENT ACTIVITIES
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International
Regional
National
1. Infrastructure Vision 2027 2. Regional Infrastructure Development Master Plan
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SIP OVERVIEW – KEY FREIGHT TRANSPORT RELATED PROJECTS OPPORTUNITIES
SIP Projects Description
SIP 1 Unlocking the northern mineral belt with Waterberg as catalyst
SIP 2 Durban-Free State-Gauteng logistics and industrial corridor
SIP 3 South eastern node and corridor development
SIP 4 Unlocking economic opportunities in the North West
SIP 5 Saldanha – Northern Cape development corridor
SIP 7 Integrated urban space and public transport programme
SIP 11 Agri-logistics and rural infrastructure
SIP 17 Regional integration for African cooperation and development
From the 18 Strategic Infrastructure Projects (SIPs) scoped, SIP7 hold direct relevance to Logistics infrastructure, namely:
The National Transport Master Plan (NATMAP) 2050 and the 25 Year Gauteng Integrated Transport Master Plan (ITMP) provides a policy blueprint for the development of passenger and freight transport infrastructure in SA.
In fact many of the projects advocated within these infrastructure plans are adopted as part of the ongoing infrastructure programs/projects of many key SOCs: Transnet, SANRAL, PRASA, ACSA, Municipal BRT program
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FREIGHT/ LOGISTICS
TRANSPORT
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MARKET STRUCTURES - FREIGHT/LOGISTICS, TRANSPORT
Private Sector Mature PPPs SOCs
PPPs
• Consolidated
• Large players
(Imperial, Barloworld,
Unitrans, Bidvest,etc)
• Cash Rich
• Highly-banked
• Mature industry
• Sishen/Saldan
aha Iron ore
line, Sasol
Gas trains
• Fully funded
• No expansion
• Transnet
(MDS)
• PETROSA
• SAMSA
• TCTA
• PRASA
Smart Cities
Basic Education
telemetry
• Private Cars
• Individual Taxi
• Private Airlines
• Private Sector Mass
Transit (Minibus
industry)
• ACSA,
• Mass Rapid
Transit –
Tshwane,
Joburg, Cape
Town
• ACSA
• SAA
• PRASA
• SANRAL
• Further Mass
Rapid Transits
• SAA PPP
• N2, N3
Market
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SOUTH AFRICA: PUBLIC SECTOR INFRASTRUCTURE SPEND PER SECTOR IN FY 2013/14 – 2019/20
32 37 39 41 4570 68 66
75 78 82 74
78 92 8191 105 106 117
31302932302626
2221201818171818
302617
2016/17
11
290
8 7
2015/16
10
261
11 14
262
15 5 5 17
10
2013/14
245
2014/15
9
2019/20 2018/19
16 12
7 7
13
8
314
2017/18
17
307 326
Public sector infrastructure expenditure and estimates, R billion
Actuals Budget Medium-term estimates
Source: National Treasury 2017 Public-sector Infrastructure Update
Administrative services Water and Sanitation
Education
Health
Human Settlements Energy
Transport and logistics
Other econ& social
Key highlights
Total public infrastructure spend for the MTEF period amounts to R687,6bn on energy, water and sanitation, transport and logistics R137,5bn on human settlements, health and education
The majority of spending will occur in transport, followed by energy and water
Actuals Budget Medium-term estimates
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GOVERNMENT AND SOE’S PLAN TO SPEND R327BN ON TRANSPORT AND LOGISTICS IN THE MEDIUM TERM 2017/18 – 2019/20
118
37
35
45 93
328
105
117
106
PRASA
MTEF
Other 2017/18 2017/18 SANRAL PRMG* Transnet Total Allocation
2019/20
Transport and Logistics Infrastructure allocation, Rbn
Source: Public-Sector Infrastructure Update *PRMG Provincial Roads Maintenance grant
MTEF estimates SOE estimates
Transport infrastructure allocation R328bn in the medium term
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Enables people and builds local
capacity
Enhances industries, job creation and investment
climate
Transforms quality of
life for many
Why It Needs Acceleration
Is an investable and feasible programme
NSC PROGRAMME ADDRESSES THE TRANSPORT INFRASTRUCTURE GAP IN AFRICA
Key insights and observations
Addresses a critical
infrastructure need
1
1
b
Lack of adequate infrastructure has severely impacted countries' trade
• Transport costs and times are prohibitively high – especially for landlocked states
• Infrastructure gap adversely impacting NSC states
A significant demand for transnational infrastructure in Africa
• Transport infrastructure along the NSC is insufficient and demand is increasing
a
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AS A CONSEQUENCE, TRANSPORT COSTS AND TIMES ARE PROHIBITIVELY HIGH – ESPECIALLY FOR LANDLOCKED STATES
Landlocked African countries face comparatively high transport costs....
18.1
2.4
Africa
Days
Europe
+654%
Europe
USD
Africa
3,059
1,496 +104%
8.4
2.9
Days
Europe Africa
+190%
+135%
1,704
USD 4,000
Africa Europe
...and long transit times
Port/air Import costs for landlocked countries
Port/air export times for landlocked countries
Land export costs for landlocked countries
Land import times for landlocked countries
Note: Costs refer to 40 dry container or semi-trailer Source: World Bank report 2010 A Time for Transformation
a 1
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TRANSPORT DEMAND IS INCREASING ALONG THE NSC FUELLED BY GROWTH IN RAIL AND ROAD FREIGHT
Rail freight dominated by SA Road freight increasing substantially
Note: Used freight volumes and most recent data on km of road and rail infrastructure to calculate expected volume / km for each year. Used this figure to extrapolate expected volume along length of the NSC. Data on volumes only available for SA, Tanzania and Mozambique; using Tanzania volume / km as proxy for other 5 countries. 2019-2020 cargo volumes calculated from average growth rate from 2011-2018. Source: Euromonitor, Google maps, BMI
b 1
20
15
10
5
0
0.2
16.9
0.3 0.2 0.1 0.2 0.2
Kt
2020
21.4
0.3 0.7 0.2
19.5
0.1 0.2
2016
18.6
0.3
+19%
0.3
0.2 0.1 0.2
2019
20.6
0.3 0.7 0.2
18.7
0.3 0.2
0.2
18.0
0.3 0.2 0.1 0.2
2017
19.2
0.3 0.6 0.2
17.5
0.3
2015
18.0
0.3 0.6 0.2
16.4
0.3 0.2 0.1 0.2
0.6
0.1 0.2
2018
19.9
0.3 0.6
Mozambique Malawi DRC Botswana Zimbabwe Zambia Tanzania SA
30,000
25,000
20,000
15,000
5,000
0
10,000
2,595
2017
27,536
4,530
8,849
1,096
Kt
9,279
2,746
1,160
2,643
3,314
4,750
29,394
2,569
2019
2,836
3,067
3,096
+17%
2020
30,470
4,886
9,545
2,917
3,260
1,127
2,670
2018
28,363
2,893
2,498
4,618
2,886
2,757
9,021
4,379
8,554
2,614
2,356
2,347
2,369
2016
26,798
4,452
8,697
2,658
2,514
1,039 2,461
2,511
2,408 1,057 2,502
2015
26,118
2,704
2,692
2,690
2,450 1,075
2,546
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TOTAL COST OF NSC AT ~$10.9BN ALMOST HALF OF PROJECTS IN ROAD WITH ~47% OF CAPEX IN PORT PROJECTS
NSC project breakdown
44 8 7 8 No. of projects
Note: Total cost from Tripartite Regional Infrastructure Projects Database (TRIPDA) 2013 for NSC related projects that have CAPEX figures. Source: Presidential Infrastructure Champions Initiative (PICI), Tripartite Regional Infrastructure Projects Database (TRIPDA) 2013
NSC priority project ~53% of total
4 2 1 1
b 2
10
5
0
Cos
t (U
SD b
n)
Other
0.7
Aiport
0.2
Border Posts
0.2
Rail
1.5
Ports
5.1
Roads
3.2
Total cost
10.9
0,10,5
3,5
1,75,8
0
5
10
Cos
t (U
SD b
n)
Border Posts
Rail Ports Roads Total cost
6 16
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MAJORITY OF INVESTMENT AIMED TOWARDS REHABILITATION PORT, ROAD AND RAIL ~90% OF INVESTMENT
0
12
10
8
6
4
2
10.9
0.8 0.1 0.2
1.5
3.2
5.1
USD
bn
Rehabilitation
4.0
0.0 0.0 0.2
0.7
3.1
0.0
New build
6.9
0.8 0.1 0.0 0.8
0.1
5.1
Total
Road infrastructure mostly rehab while new builds focused on ports
Other
Bridge
Border Post
Rail
Road
Port
Material and machinery account for 58% of estimated CAPEX
b 2
Note: Energy station estimates from Hydro plant cost structure, Border Post/Bridge Breakdown estimated using Road cost structure benchmark. Port and Rail breakdown calculated from global benchmarks. Source: Tripartite Regional Infrastructure Projects Database (TRIPDA) 2013, Baltic Roads, IJETCH, US Army Corps of Engineers, BSL
Ove
rall
proj
ect c
ost b
y ca
tego
ry
Maj
or s
ubca
tego
ries
USD
bn
Bridge
0.1
Border Post
0.2
Rail
1.5
Road
3.2
Port
5.1
Total cost
10.1
36%55%
43%
12%
46%18%
13%
30% 30% 30%
40%37%
60%
7%
60% 60%
5%5%5% 5%5%
5%
7%
4%
Bridge Border Post Rail Road Port Total
Machinery Materials Other Workforce
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INEFFICIENT MOVEMENT OF GOODS HAVE HAD A DISRUPTIVE EFFECT ON TRADE – EXAMPLE BEIT BRIDGE
Major delays at Beit bridge between Southern Zim and SA inhibiting trade
Reducing wait time by 50% would yield ~$11.4bn marginal trade flow from SA to Zim over 5 yrs
3 3 a
Busiest regional transit link in southern and eastern Africa • >400 trucks cross Beit Bridge border post / day
Long delays caused by poor infrastructure design/capacity
• Revenue collector has inefficient centralized declaration system • Bill of entry documents no longer processed at border posts
– Documents processed in Harare/Bulawayo /Masvingo • Poor bandwidth further hampers clearing process • Physical inspection done 1km from border at Cargo Carriers
due to depot capacity constraint
Delays result in lost economic value for business and gov't • Cargo trucks often wait for clearance at the border for days • Firms incur significant losses, much of which goes into
demurrage fees charged by cargo shipment firms – Demurrage is a charge payable to owner of freight truck on
failure to load/discharge truck within the agreed time – Businesses moving goods from outside the country paying
US$250-500 in demurrage fees for delays • Delays shorten the sales window for some goods • 3 day delay increases price of petrol ~3.3% and sugar ~3%
1. Zimbabwe Revenue Authority Note: Assumed no constraint on traffic flowing through OSBP. Assumed 2015 customs value will be double current amount by end of 2015. Assumed perfectly linear relationship between wait time and processed traffic/customs volume . Assumed ZAR/USD at 10. Source: BCG analysis, Stats SA, BD Live, Zimbabwe Situation, The Herald, Construction Review Online, The Standard, TradeMark SA
2
50
45
40
0
12
10
8
6
4
Traffic volume ('000)
USD
(bn)
Total
11.4
2015 (proj.)
2.3
52
2014
2.4
53
2013
2.4
52
2012
1.8
45
2011
1.4
39
2010
1.1 37
Marginal customs value from shorter wait time Marginal increase in processed traffic
Chirundu OSBP saw 50% reduction in freight average wait time after 1 year in operation
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VIGNETTE: CHIRUNDU OSBP HAS SUCCESSFULLY IMPROVED TRAFFIC THROUGHPUT AND CREATED ECONOMIC VALUE
OSBP created to streamline border process OSBP saves ~$600k per day
Aid for Trade initiative involving the NSC/Tripartite (SADC/COMESA/EAC)
• Pilot trade facilitation project aimed at reducing cost of doing business
• Programme managed by secretariat of COMESA on behalf of Tripartite
• ~$2.7bn was raised for the project Four lanes available for crossing into Zambia from Zimbabwe
• All formalities completed on the side of the border from which vehicles are crossing
Utilises a process and tool oriented approach • Fast track lane for low risk clients who have pre-
completed clearance online • Utilise non-invasive scanners in targeted manner • Plans to use scanners for individuals which eliminate
need to unload bags from buses • Less bureaucratic process lowers likelihood of
corruption – Fewer processes potentially involving bribery
OSBP has made significant financial impact for private/public sectors
• Improved customs operations led to doubling of Zambia trade tax rev. w/t tax increases between 2010-2012
• By mid-2012 the private sector was saving about $20m a month due to faster transit times
• Agriculture key sector driving development of OSBP according to Chairman of Tripartite Task Force
Financial savings driven by growth in traffic volumes
• 65% increase in border post traffic in last 4 yrs • 8500 commercial vehicles per month • Most vehicles cross within 24 hrs
Previous average wait time of 72-120 hours
Note: News source stated $2.7bn raised through funding pledges from DFID, JICA, World Bank, AfDB and DBSA. Aid for Trade refers to initiatives aimed at boosting development in partner countries through targeted assistance. Source: Trade Mark SA, Approved procedures for OSBP Operations, IPP Media
3 3 a
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LOGISTIC INTENSIVE INDUSTRIES WITH HIGH TRANSPORT COST AS % OF SALES WILL BENEFIT MOST FROM NSC
5
6
6
8
10
10
11
25
Cellulose, paper (IG)
Oil and gas extraction
Coal mining
Agriculture basic products
Fishing
Agriculture & Forestry
Construction mining
Stones and earths
Raw materials Manufacturing and processing
industries Consumer products, services
and retail
Note: Average of 2006, 2008, 2010, 2012 figures. Sub industries averaged to create single figure e.g. Automobile parts and Automobile repair. Source: Top 100 in European Logistics , ed. 200,7 & ed. 2009, & ed. 2011, & ed. 2013 Fraunhofer SCS Institute, prof. Kille
1123344555555566667
10
Tobacco Medical technology
Machinery and equipment Construction services
Mechanical engineering Oil processing
Chemical products Solid fuel and oil products
Iron ore and steel Wood, construction material
Food industry
Furniture/jewlery
Cellulose, paper (CG)
Chemical Industry Construction products
Civil engineering Automobile manufactuirng
Metal processing (IG/CG) Waste
Electricity equipment
11111111222222222233455556
Pharmaceuticals
Consumer Automobile Electrical household goods
Gasoline, fuel, petrol stations Books, newspapers
Repair service Orthopedics and antiquity
Hotels and restaurants Drugstore, cosmetics
Consumer tobacco Houseware
Consumer broadcast/TV Broadcasting and TV
Data proc. machines, PCs
Gasoline, fuel, petrol stations Pharmaceuticals
DIY Instalation, crafts
Food and beverages Clothing
Electrical household goods Consumer Automobile
Agriculture consumer products Consumer other food
Mail order Consumer pharma products
Transport costs as % of sales1 Transport costs as % of sales1 Transport costs as % of sales1
Global data
3 3 b
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NSC TRANSPORT IMPACT INDUSTRY MATRIX SHOWS OVERLAP OF IMPORTANCE ACROSS MULTIPLE COUNTRIES
Industry Metric SA TAN DRC ZAM BOT ZIM MOZ MAL
Mining Part of National development plan
High Growth industry (status quo)
Important industry (GDP contribution)
Agriculture Part of National development plan
High Growth industry (status quo)
Important industry (GDP contribution)
Retail Part of National development plan
High Growth industry (status quo)
Important industry (GDP contribution)
Manufacturing Part of National development plan
High Growth industry (status quo)
Important industry (GDP contribution)
Construction Part of National development plan
High Growth industry (status quo)
Important industry (GDP contribution)
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✗ ✓ ✗ ✗ ✓ ✗ ✓ ✗ ✓ ✗ ✗ ✗ ✓ ✓ ✗ ✗ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✓ ✓ ✗ ✓ ✓ ✓ ✓ ✗ ✗ ✓ ✓ ✓ ✓ ✓ ✓ ✗ ✓ ✗ ✗ ✗ ✗ ✗ ✓ ✓ ✗ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗ ✓ ✗ ✓ ✗ ✓ ✓ ✓ ✗
Note: Defined high growth industry as a top 3 growth industry for that county from 2009 to 2013/14 as percentage of GDP. Defined high GDP contribution as >10% of GDP Source: National Development Agendas, African Economic Outlook
3 3 c
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✗ ✓ ✓ ✓ ✗ ✓ ✗ ✓ ✗ ✓ ✗ ✓ ✗ ✗ ✗ ✗
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NSC COUNTRY INDUSTRY BREAKDOWN
Largest industries1
• Retail (21%) • Public sector (19%) • Construction (15%)
• Services (20%) • Public sector (17%) • Retail (15%)
National agenda, strategic goals and priorities
• Mining (25%) • Public sector (16%) • Retail (16%)
• Economic diversification • Exporting to neighbours • Infrastructure/Education development
1.Percentage of GDP. 2 2009-2013 growth rate in composition of total GDP. DRC, Zambia, Malawi GDP change measured over 2009-2014 Source: National Development Plans, African Economic Outlook
• Agriculture (34%) • Retail (13%) • Services (10%)
• Diversifying economy – agriculture, energy, resources • Infrastructure development – key to trade hub • Employment creation and inclusive growth
• Agriculture (28%) • Retail (21%) • Services (17%)
• Sustainable and inclusive growth • Building diversified economy • Decentralising economy
• Diversifying economy – agriculture, energy, resources • Infrastructure development – key to creating trade hub • Employment creation and inclusive growth
• Retail (17%) • Manufacturing (13%) • Transport (13%)
• Agriculture (23%) • Manufacturing (24%) • Transport (14%)
• Agriculture (29%) • Retail (14%) • Manufacturing (11%)
Growth industries2
• Elec./gas/water (61%) • Retail (6%) • Mining (2%) • Mining (53%) • Construction (27%) • Public sector (7%) • Retail (13%) • Construction (12%) • Transport (12%)
• Construction (29%) • Public sector (28%) • Transport (16%)
• Mining (54%)
• Construction (75%) • Public service (37%) • Services (18%) • Mining (125%) • Public sector (24%) • Services (4%)
• Services (30%) • Construction (63%) • Public sector (24%)
• Boost manufacturing share of GDP from 15% to 30% • Increase manufactured exports to SADC, COMESA and
rest of world • Diversification • Education/training • Improve coordination/effectiveness of public institutions
• Integrated economy through infrastructure development • Stable rural/urban economy • Inclusive growth
• Increasing exports • Employment creation • Fiscal policy to increase consumer savings
Logistics heavy ind.1
• Manufacturing (13%) • Mining (9%) • Agriculture (2%) • Manufacturing (7%) • Transport (7%) • Mining (5%) • Mining (5%) • Construction (5%)
• Agriculture (10%) • Manufacturing (8%) • Mining (7%)
• Construction (7%) • Manufacturing (6%) • Transport (6%) • Agriculture (12%) • Mining (10%)
• Transport (9%) • Mining (4%) • Construction (3%) • Manufacturing (9%) • Transport (6%) • Mining (1%)
3 3 c
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NSC WITH POTENTIAL TO INCREASE GDP OF IMPACTED COUNTRIES BY ~$16.1BN, GROWTH RATE BY 0.1%
600
0
1,000
800
400
200
USD bn
3.5%
2035
913
562
99
75 45
35 47
39 11
2025
701
464
66 48
31 26 30 26 8
2015
458
336
34 23 17 16 14 13 5
1,000
800
600
400
200
0
USD bn
3.6%
2035
913
2025
929 (+16)
701
2015
715 (+14)
458
458
Status quo growth Growth with NSC
Status quo South Africa value add Tanzania value add DRC value add
Zambia value add Botswana value add Zimbabwe value add Mozambique value add Malawi value add
South Africa Tanzania
DRC Zambia
Botswana Zimbabwe
Mozambique Malawi
Source: BCG analysis, see sources & assumptions slides
3 3 c
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104.9
2025
+6% 8%
USD bn
98.8 71.6
2035
66.4
2015
34.0
47.6 14.1
+1% +1% USD bn
47.3
2035
29.9
2015
30.1
2025
2015
32.1
2025
31.4 45.1
USD bn
17.0 46.0
2%
2035
+2%
16.4
2015
USD bn +1%
1%
2035
35.6 26.5 35.2
2025
26.8
1% USD bn 1%
464.5
2035
567.4 561.8
2025
469.3
2015
336.4
10.6 10.5
2035
USDbn
0.5%
2025
7.9 7.8
2015
4.7
+1%
USD bn +3%
5%
2035
40.7 39.4
2025
27.3 26.0
2015
12.9
76.6
USD bn +2%
2%
2035
75.3
2025
49.5 48.3
2015
22.9
Growth differential1: 0.8%
Growth differential1: 0.1%
Growth differential1: 0.1%
Growth differential1: 0.2%
Growth differential1: 0.1%
Growth differential1: 0.3%
Growth differential1: 0.1%
Growth differential1: 0.5%
Note: Difference between status quo and NSC impacted average GDP growth rate from 2015-2034 Source: BCG analysis, see sources & assumptions slides
~$16.1BN TOTAL IMPACT IN 2035 GDP AS RESULT OF NSC
SA
Zimbabwe
Zambia
Moz.
Botswana
Tanzania
Malawi
DRC
GDP with NSC Status quo % increase in size Absolute increase (USD bn)
3 3 c
0.4
5.6
0.3
4.8
1.3 1.2
0.1 0.1
1.3 1.3
5.2 6.1
0.7 0.9
0.3 0.2
|
NSC WILL CREATE 574K EXTRA JOBS BY 2035
0
150
100
200
50
250
thousands
33
16
30
16 5 4 2
2
238
94
10
35
88
10
132
52
31
9 23
16
89
13 5 5
22
43
15 7
2 0.2 1 5
34
13 4 3
11
7
4
2 0.5 0.3 0.2
1
2 3 4
2
Agriculture Manufacturing Retail & wholesale Construction Mining
Jobs created as a result of NSC
Source: BCG analysis, see sources & assumptions slides
Bot DRC SA Moz Mal Tan Zam Zim
60
153
62
574
86
213
Total
3 3 c
|
+0.005
+0.004
2035
2.2
2.2 20
25
1.6 1.6
2015
1.0
+0.0006
+0.0004
2035
0.1 0.1
2025
0.1 0.1
2015
0.1
+0.043
+0.03
2035
8.9 8.8
2025
5.9 5.9
2015
3.0
INDUSTRY ACCELERATION COULD LEAD TO TENS OF THOUSANDS OF ADDITIONAL JOBS IN ALL COUNTRIES (I/III)
Source: BCG analysis, see sources & assumptions slides
Ret
ail
Min
ing
+0.016
+0.014
2035
3.2 3.2
2025
2.6 2.6
2015
1.8
+0.007
+0.005
2035
2.4 2.4
2025
1.5 1.5
2015
0.7
+0.002
+0.001
2035
1.0 1.0
2025
0.9 0.9
2015
0.8
+0.01
+0.007
2035
3.1
3.1
2025
2.9
2.9
2015
2.7
+0.002
+0.002 20
35
4.5
4.5
2025
4.3
4.3
2015
4.2
+0.009
+0.008
2035
0.7 0.7
2025
0.6 0.6
2015
0.4
+0.002
+0.002
2035
0.3 0.3
2025
0.2 0.2
2015
0.1
+0.004
+0.003
2035
0.3 0.3
2025
0.2 0.2
2015
0.1
+0.005
+0.003 20
35
0.4 0.4
2025
0.2 0.2
2015
0.1
+0.0003
+0.0003
2035
0.03 0.03
2025
0.02 0.02
2015
0.01
+0.035
+0.024
2035
0.7 0.7
2025
0.5 0.5
2015
0.2
+0.0002
+0.0002
2035
0.04 0.04
2025
0.03 0.03
2015
0.02
+0.004
+0.002
2035
3.5
3.5
2025
3.5
3.5
2015
3.4
millions
SA Zim Zam Moz Bot Tan Mal DRC Increase in no. of jobs (millions) Jobs with NSC Status quo
3 3 c
43k and 16k new jobs in Mozambique and SA retail respectively
|
+0.001
3.9 3.9
+0.001
2025
3.9 20
35 3.9
2015
3.9
2025
0.01 0.01
2015
0.01 0.02 0.02
+0.0002
+0.0002
2035
1.2 1.2
+0.022
+0.018
2035
2025
1.0 0.9
2015
0.6
INDUSTRY ACCELERATION COULD LEAD TO TENS OF THOUSANDS OF ADDITIONAL JOBS IN ALL COUNTRIES (II/III)
Source: BCG analysis, see sources & assumptions slides
Agr
icul
ture
M
anuf
actu
ring
+0.023
+0.02
2035
1.3 1.2
2025
1.0 1.0
2015
0.8
+0.003
+0.002
2035
4.6 4.6
2025
4.5 4.4
2015
4.3
+0.002
+0.002
2035
3.6 3.6
2025
3.6 3.6
2015
3.6
+0.088
+0.072
2035
15.0
14.9
2025
14.7
14.6
2015
14.3
+0.011
+0.01 20
35
16.3
16.3
2025
16.2
16.2
2015
16.1
+0.031
+0.023
2035
3.9 3.9
2025
2.9 2.9
2015
1.8
+0.004
+0.003
2035
0.9 0.9
2025
0.6 0.6
2015
0.3
+0.005
+0.004
2035
0.7 0.7
2025
0.5 0.5
2015
0.3
+0.005
+0.004 20
35
0.7 0.7
2025
0.5 0.5
2015
0.2
+0.0005
+0.0004
2035
0.07 0.07
2025
0.06 0.06
2015
0.04
2015
0.8
+0.007
0.9 0.9
2035
0.8
2025
0.7
+0.01
0.2 0.4
0.4
+0.002
+0.001
2035
0.6 0.6
2025
2015
1.1 1.1
+0.004
+0.003
2035
1.1 1.1
2025
2015
1.0
SA Zim Zam Moz Bot Tan Mal DRC Increase in no. of jobs (millions) Jobs with NSC Status quo
3 3 c
millions
~88k new jobs in Tanzania agriculture
|
+0.007
+0.005
2035
0.4 0.4 20
25
0.3 0.3
2015
0.2
+0.002
+0.002
2035
0.06 0.06
2025
0.04 0.04
2015
0.03
+0.013
+0.007
2035
0.3 0.3
2025
0.2 0.2
2015
0.1
INDUSTRY ACCELERATION COULD LEAD TO TENS OF THOUSANDS OF ADDITIONAL JOBS IN ALL COUNTRIES (III/III)
Source: BCG analysis, see sources & assumptions slides
Con
stru
ctio
n
+0.052
+0.045
2035
1.8
1.8
2025
1.7
1.6
2015
1.4
+0.016
+0.011
2035
0.7 0.7
2025
0.4 0.4
2015
0.2
+0.016
+0.012
2035
0.5 0.5
2025
0.4 0.4
2015
0.2
+0.094
+0.065
2035
0.9
0.8
2025
0.7 0.6
2015
0.5
+0.013
+0.008 20
35
0.4 0.4
2025
0.3 0.3
2015
0.2
SA Zim Zam Moz Bot Tan Mal DRC Increase in no. of jobs (millions) Jobs with NSC Status quo
3 3 c
millions
~52k new jobs in SA construction
|
2.9
0.7 0.2 0.6 0.4
2.9
0.7 0.2 0.6 0.4
2.8
0.7 0.2 0.6 0.4
2.8
0.7 0.2 0.6 0.4
2.7
0.7 0.2
0.6 0.4
2.7
0.7 0.2
0.6 0.4
2.6
0.6 0.2
0.6 0.4
2.6
0.6 0.2
0.6 0.4
2.5
0.6 0.2
0.5 0.4
2.4
0.6 0.2
0.5 0.4
NSC impact (billions)
0.2 0.8
3.0
0.2
0.4 0.6
3.0
0.9 0.8 0.9
0.4
0.9 0.8 0.9 0.9 0.8
0.6
0.8
0.8
0.8 0.9 0.9
3.8
1.1 1.5
0.2 1.5
0.2 0.3 3.7
1.1 1.6 0.2 1.5
0.2 0.2 3.6
1.6 0.2 1.5
0.2 0.2 3.5
1.2 1.7 0.2 1.4
0.2 0.2 3.4
1.3
0.2 1.4
0.2 0.2 3.3
1.3 0.2 1.4
0.2 0.2 3.2
1.4 0.2 1.3
0.2 0.2 3.0
1.4 0.2 1.3
0.2 0.2 2.9
1.5 0.2 1.3
0.2 0.2 2.8
0.1 1.2
0.2 0.2
NSC impact (billions)
0.2
3.9
1.5
0.2 0.3 3.9
0.2
1.5
0.2 0.3
KEY COUNTRIES' LOGISTICS HEAVY INDUSTRIES WILL BENEFIT SUSTAINABLY FROM NSC
South Africa
Tanzania
High economic contribution from logistic heavy industries...
South Africa
Construction Manufacturing Agriculture Mining Retail & wholesale
0.0 0.0
2025
0.5
0.1 0.2
0.0 0.0
2024
0.4
0.1 0.2
0.0 0.0 0.2
0.1
0.1
0.1
2029
0.2 0.1
0.1 0.1
2030
0.1 0.2
0.1 0.1
2031
0.6
2034
0.5
2033
0.6
0.1 0.2
0.1 0.1
2032
NSC impact (billions)
2035
0.1
0.6
0.2 0.1
0.1 0.6
0.1
0.2 0.1
0.1
0.2 0.2 0.2 0.2 0.2 0.2 0.2
0.6
0.2 0.1 0.1 0.2
0.6
0.1 0.2
0.1 0.1
2028
0.5
0.1
0.6
0.2 0.1 0.1
2027
0.1 0.2
0.1 0.0
2026
0.5
0.1 0.2
0.2
DRC
Note: Assumed NSC completed by 2024 and then begins to directly benefit industry. Source: BCG analysis, see sources & assumptions slides
3 3 c
|
AGENDA
1 2 3
DBSA overview
The South African Infrastructure landscape
DBSA initiatives across the region
33
| |
CASE STUDY (REST OF AFRICA): NORTH SOUTH CORRIDOR
34 North-South Corridor and Beira Development Corridor MoU’s signed by Country Ministers
The signing of the NSC and Beira Development Corridor (BDC) MoU is creating more project Opportunities in the SADC region
The DBSA was requested by SADC to support
them in the establishment of the NSC and BDC Management Institutions that will drive the priority projects forward
South Africa is occupying the SADC chair position
until August 2017 – we will thus be driving the SADC infrastructure programme in support of SADC
Majority of investment need is aimed towards
rehabilitation of dilapidated infrastructure
Other Countries requested SADC to replicate these corridor institutions for their key corridors – and DBSA is their to provide the advisory support and identifying their key projects for preparation and investment
The scale of the programme requires a structured approach to avoid technical complexities Many stakeholders involved Complexity can be managed by staggering
the programme with prioritised cornerstone projects
Major risks can be effectively mitigated with proven transnational management measures
| |
NORTH-SOUTH RAIL CORRIDOR PROJECT OVERVIEW
35
Problem Statement: • NSC Rail freight market share is less than 10% • Lack of co-ordination between the respective
operators (4 countries / 5 operators) resulting in a non-competitive transport solution due to:
• Service delivery challenges • Operational Challenges • Infrastructure challenges
• Infrastructure, equipment and safety challenges
• Limited available funding Expected Outcomes: • Rehabilitation and upgrade of the existing
infrastructure and equipment • Seamless rail logistics corridor that will promote
the migration of traffic from road to rail • Innovative funding strategy for the entire
corridor
Project prep financing secured • Funding secured by the NBF through the
SADC PPDF Facility managed by the DBSA
Source: Nepad Business Foundation
| |
NORTH-SOUTH RAIL: PROJECT IMPACT
36
• Improved regional integration and collaboration • Increased volume of trade • Increased economic growth • Local economic development (Job creation - direct and indirect) • Support for industrialisation strategy through linkage of functional rail network to industrial
hubs • Reduced externalities
• Traffic congestion • Loss in economic activity • Social costs such as road accidents • Reduced carbon footprint
• Reduced transport costs • Reduced cost of import and export of goods • Increased export competitiveness • Reduced pressure on road infrastructure
(physical and cost)
|
CASE IN POINT: TRANSNET HAS GONE PUBLIC WITH A NEW DBSA-LED FINANCING ARRANGEMENT… AS PART OF OUR STRUCTURED SOLUTIONS OFFERING
37
“New Transnet, DBSA finance scheme set up to support African rail exports” - Engineering News, 28 Aug 2017
The deal creates a new facility that will extend favourable financing to African and Middle Eastern buyers of Transnet Engineering’s rail rolling stock and port equipment.
The financing scheme will be branded under the Transnet Finance Company banner, but will be operated by the DBSA, backed by a consortium of commercial banks
|
A Re Yeng is one of 12 cities’ Bus Rapid Transit (“BRT”) projects approved via government’s Public Transport Strategy & Action Plan to improve access and quality of public transport
Tshwane Rapid Transit (Pty) Ltd (“TRT”) is a bus operating company set up in terms of National Land Transport Act to operate the BRT in the City of Tshwane
TRT is to be owned by the incumbent taxi and bus operators DBSA approved R786 million for TRT for the acquisition of 171 buses Support of Integrated Rapid Public Transport Networks, part of government’s Public
Transport Strategy, a key social initiative
CASE STUDY (SA): A RE YENG TSHWANE RAPID TRANSIT – PROJECT OVERVIEW
20
|
Development Impact: Aim is to correct socio-economic
impact of poor historic spatial planning
Improved quality of life through a
safe, affordable, reliable, efficient and integrated transport system
Economic growth of R437 million
via investment in marginalized areas and R1.324 billion in provincial capital formation
1,614 new direct jobs to be created
from bus project, with 275 for the unskilled
R259m household income and
R125m fiscal impact
A RE YENG TSHWANE RAPID TRANSIT (CONT.)
21
Phase 1 A
|
IF SPECIFIC INDUSTRIES WERE FULLY UNLOCKED, THE IMPACT WOULD BE EVEN GREATER – FOR EXAMPLE: O&G IN MOZAMBIQUE
Necessary enablers Potential economic impact Description of potential
• >100 trillion cubic feet of gas in concession off north-eastern coast
– Enough to become 3rd largest LNG exporter
• Could absorb $100bn of investment over next decade
• Infrastructure ramp up – Terminals construction
within 5-6 years
• Investment from private sector to drive industry development
– Anadarko working with ENI to develop liquefaction infrastructure
• Strong industry regulator to drive transparency and competitive practices
• Favourable external market factors
– Price consistently exceeding cost to produce
20
0
10
30
2024
USD bn 30.0
2026 2022
23.6
17.3
2020
11.2
2018
5.5
Revenue from LNG
Note: Used 2025 LNG price for 2026 due to lack of data. LNG price is Natural Gas LNG for Japan in $/mmbtu. Converted mmbtu to Mt by dividing by 2x10^-8 Source: Bloomberg, World Bank Commodities Price Forecast, Oxford Institute for Energy Studies
|
MULTIPLE INDUSTRIES STAND TO BENEFIT FROM GREATER MOBILITY AND CONNECTIVITY
Hotels (including budget hotels) to benefit from
increased flow of regional tourists
Restaurant / Service industries to benefit from
higher PAX flow and greater population mass
Retailers and consumer staples (e.g. food and
beverages) benefit from greater potential market
Property
With greater mobility and urbanisation, property
value and property development activities
could rise
South African produced goods benefit through
enhanced regional access
Local Transportation
Provider of local transport (e.g. city buses, car rental) from / to near-by cities to
stations benefit from increased tourist traffic
Hotels Restaurant / Services Retailers & Consumer Staples Local Producers
Logistics
Benefit from logistic cost savings and efficient
delivery mode e.g. increased cargo capacity
at Durban/Dar ports
1 2 3 4
5 6 7 Rolling stock and Rail infrastructure
Supplier/manufacturer of rolling stock and rail
infrastructure components to benefit throughout construction
8
| |
Thank you
Mohan Vivekanandan Group Executive: Origination & Client Coverage +27 11 313 3821 [email protected]