DBSA bill back in Parliament

Amid the budget vote presentations, the Fifth Parliament’s first deliberations on actual legislation kicked off today when the Standing Committee on Finance was briefed by National Treasury on the Development Bank of Southern Africa (DBSA) Amendment Bill. The DBSA Bill was actually tabled in the last Parliament prior to the elections but as there was not sufficient time to discuss the proposed amendments, the new National Assembly agreed to resume proceedings on the Bill.

The DBSA is mandated to develop key infrastructure sectors such as water and sanitation, energy, transport, education and health. Their key areas of focus are municipalities, state owned companies, independent power producers ad public-private partnerships. Outside South Africa, DBSA also focuses on the SADC region.

The proposed changes to the Bill include extending the Bank’s operations to other African countries beyond SADC, to increase authorised share capital of DBSA and to enable further increases to address the growing demand for infrastructure funding and enhance the Bank’s capital base. The Bill also aims to amend the Minister’s regulation-making powers.

The DBSA’s authorised share capital proposal is that its share capital move from R5 billion to R20.2 billion as well as changing the number of shares from 500 000 to 2 020 000.

The Bill would enable the Minister to initiate regulations without having to be requested by shareholders of the Board to do so and the Minister now would have the power to determine which other African countries outside SADC the DBSA may operate in.

After the presentation by the National Treasury, DA MP, Dr Dion George, wanted to know where DBSA would be getting the money from to fund the steep increase in the share capital. He added that if the money would be coming from the public then there needed to be checks and balances in the Bill to ensure the money “is going to get properly spent”.

Even though Treasury’s Ben Mokheseng explained that the increased figure was not made up “of actual cash” but rather “callable capital” that “helps when we go into the market to negotiate better terms for borrowing”, George was still unsatisfied. “The fact of the matter is that it is callable [then] if an event occurs that you have to call on the money, you have to call on it,” George said.

Earlier, Treasury’s Lefentse Radikeledi had said the there were prudential limits that brought into account the political risks a country faced before a loan was granted and that so far very few countries had been unable to pay back their loans. Radikeledi added that the DBSA’s focus was “not just about making money but also about regional integration”.

Later, on the proposal that the Finance Minister determine which African countries the DBSA does business with, Committee Chair Yunus Carrim asked whether the Bill should set out basic criteria, “or is that over regulatory?” Treasury’s legal drafter, Adv Empie van Schoor, speaking in her personal capacity, said that she thought that the Chair’s suggestion would be helpful.

During the course of the discussion, ANC MP Pinky Kekana questioned why the Department had called for public comment during December/January 2013, saying that it was “very unfair” for municipalities and other stakeholders to participate at that time of year.

Van Schoor responded that she agreed it was not the best time to have public hearings but they had to be scheduled that time in order for the Bill to be tabled in Parliament in time for it to be passed before the elections. Van Schoor added that she hoped that when the Committee looked at the submissions, more members of the public would be given the chance to comment on the Bill.