South Africa and Germany to renew Memorandum of Understanding and to provide new million-dollar credit line

Germany’s KfW Development Bank renewed its Memorandum of Understanding (MOU) with the Development Bank of Southern Africa (DBSA), which is part of the bilateral development cooperation between Germany and South Africa, in order to continue the successful collaboration on the financing and implementing of programmes.

“2019 was another successful year of cooperation between the Development Bank of Southern Africa and KfW. This has been a trusted partnership that spans more than two decades. As joint members of the IDFC, the two institutions will continue to co-operate and support the region’s transition to a low carbon future and economic growth through the development of infrastructure. We help partner countries to create better living conditions whilst protecting the climate and environment at the same time,” said Dr. Thomas Duve, KfW Director for Southern Africa.

Further to that the DBSA and KfW recently signed a US $ 100 million (R1.4 billion plus) credit line for key infrastructural projects in the region. Speaking at KfW’s Annual Reception today, Dr. Duve said that this latest signing marks the largest transaction between the two institutions and will enable the DBSA to support the construction of the Standard Gauge Railway in Tanzania.

According to Dr. Duve, a key project that is being implemented by the DBSA is the SADC Regional Fund for Water Infrastructure and Basic Sanitation, which addresses two key challenges in the region. “Water supply in Southern Africa is unequally distributed with 70% of water resources shared between a number of different countries. Transboundary water management is crucial for peaceful development of the region. Therefore, regional coordination must be established and strengthened. On behalf of the German government, KfW is providing € 15 million in grant funding for the SACD Regional Fund for Water and Basic Sanitation project. “The productive partnership on this programme enables financing of regional priority investment to develop regional water and sanitation infrastructure. At the same time, the cooperation of SADC member states and their joint water management is strengthened, as well as the SADC Secretariat as the coordinator among them. The overarching common goal is the improvement of economic and political regional integration in the SADC region,” Dr. Duve added.

Two major infrastructure projects that fall under this project are the Kazungula Water Supply Project in Zambia which is expected to benefit approximately 12 500 people by 2024 and includes a new cross-border bridge over the Zambezi River which will connect Zambia and Botswana, opening a regional trade corridor and the Lomahasha / Namaacha Cross Border Water Supply Project between Mozambique and eSwatini which will see the installation of rising mains, pumping stations and a reservoir in border towns. The SADC Regional Fund for Water Infrastructure and Basic Sanitation was launched in 2012 and will be completed in two phases by 2023.

The SADC Project Preparation Development Facility (PPDF) is another key programme to which the KfW has committed € 24.3 million in grant financing. Implemented by the DBSA, this aims to create a conducive investment environment for the SADC Region. It supports projects that enable regional integration and provides technical assistance for infrastructure project identification, preparation and feasibility studies with a view to making the projects bankable and attractive to investors. Targeted sectors span energy, water and sanitation, transport, telecommunications and tourism infrastructure. Funding is limited to projects within the SADC region that span two or more countries. If located in one country, projects must facilitate and promote regional integration.

“Our vision is for the infrastructure investments to benefit the residents through improved service delivery. This is realised by strengthening the role of the SADC-Secretariat in implementing the Regional Infrastructure Development Plan (RIDMP) and by supporting the cooperation between public and private sectors,” Dr. Duve explained. This project began in 2011 and extends to 2022 with the possibility of an extension beyond that. The first phase is valued at € 4.8 million, the second at € 6.0 million and the third phase € 13.5 million. Though co-funding with the EU, € 12 million is provided to projects in Botswana.

Germany has contributed approx. 35 billion ZAR in official development assistance to South Africa since 1994. Current cooperation focuses on the priority areas of green economy, technical and vocational education and training/skills development, good governance and public administration, as well as HIV prevention.