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PARTNERSHIPS FOR FINANCING DEVELOPMENT PROJECTS AND INFRASTRUCTURE CAIAPHAS HABASONDA - PowerPoint PPT Presentation


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PARTNERSHIPS FOR FINANCING DEVELOPMENT PROJECTS AND INFRASTRUCTURE CAIAPHAS HABASONDA (DIRECTOR OF CREDIT) PRESENTATION TO THE AFRACA 2 ND CENTRAL BANK FORUM HELD IN LIVINGSTONE ZAMBIA 23 RD –25 TH SEPTEMBER 2008. HISTORY. DBZ set up in 1972 and commenced operations in 1974

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PARTNERSHIPS FOR FINANCING DEVELOPMENT PROJECTS AND INFRASTRUCTURE

CAIAPHAS HABASONDA

(DIRECTOR OF CREDIT)

PRESENTATION TO THE AFRACA 2ND CENTRAL BANK FORUM HELD IN LIVINGSTONE ZAMBIA

23RD –25TH SEPTEMBER 2008

history
HISTORY
  • DBZ set up in 1972 and commenced operations in 1974
  • DBZ financed a significant number of industries
  • The 1990s, liberalization and Development financing in Zambia.
  • DBZpost Liberalization
restructuring
RESTRUCTURING

2003

Restructuring

Sourcing of

Equity and debt

finance

  • Exim Bank of India
  • DBSA
  • DBZ Bond
  • AFREXIM Bank

Shift of Focus

  • Bank begins lending again
  • Debt Finance raised through lines of credit and DBZ bond issue
  • Limited equity raised
  • Shift focus from debt to raising equity
  • New strategic focus
slide5

Development Objectives

  • GDP growth
  • Stronger business linkages and greater access to

economic opportunities

  • Promotion of social and economic infrastructure development
  • Strengthening entrepreneurial and managerial capabilities and

good governance principles

  • Creating a more conducive business and investment climate
  • Supporting business practices that are consistent with

environmentally sustainable development and natural resources

management principles

slide6

FINANCING DEVELOPMENT

  • Traditional Development Banking interventions
  • Public Private Partnerships (PPP)
slide7

PPPs

Public Private Partnership (PPP) refers to a contractual agreement formed between a government agency and a private sector entity that allows for greater private sector participation in the delivery of the public infrastructure projects

slide8

RATIONALE

  • Gap between needs and resources
  • Pressure on traditional government budget for funding infrastructure
  • Unlocking capital in land and buildings & other assets
  • Infrastructure as source of profit-incentive for private business
slide9

FINANCING GAP

Evidence- congested roads, hospitals, poor sanitary facilities, dilapidated schools etc

  • Consequencies
    • Increased cost of economic activity
    • Lower productivity
    • Reduced competitiveness
slide10

Problem or Opportunity

  • If Risk only, then Problem
  • If Return only social goals suffer
  • Risk + Retun = Opportunity
  • In Comes PPP
slide11

PARTNERSHIPS FOR FINANCING PROJECTS

DELOITTE REPORT: CLOSING THE GAP INFRASTRUCTURE GAP THE ROLE OF PPPS

  • Governments increasingly turning to PPP
  • Private Sector Perfect Partner for
      • Financing
      • Design
      • Construction
      • Executing and Managing
slide12

PARTNERSHIPS FOR FINANCING PROJECTS

Models

  • Design Build (DB)
  • Design Build Maintain (DBM)
  • Design Build Operate (DBO)
  • Design Build Operate and Maintian (DBOM)
  • Build Own Operate Transfer-(BOOT)
  • Build Own Operate (BOO)
  • Design Build Finance Operate (DBFO, DBFM or DBFO/M)
slide13

PARTNERSHIPS FOR FINANCING PROJECTS

Models

  • Service Contract
  • Management Contract
  • Lease
  • Concession
  • Divestiture
slide14

PARTNERSHIPS FOR FINANCING PROJECTS

BENEFITS

  • Augmenting Traditional Sources of Funding
  • Spreading Cost of investment over Life time of Asset
  • On Time On Budget Delivery
  • Transfer of Risk (and Return) to Private Sector (incentive for maintainance)
  • Lowers Construction and Life Cycle costs
  • Satisfaction matrix embedded in contract-strong customer service orientation
slide15

PARTNERSHIPS FOR FINANCING PROJECTS

BENEFITS

  • Allows public sector to focus on outcomes and core business
slide16

PARTNERSHIPS FOR FINANCING PROJECTS

CHALLENGES

  • Policy, Legal and Regulatory Framework
  • Capacity; management, process and transaction
  • Choice of Appropriate Model
  • Financing-Huge outlays of capital required/lack of appropriate funding
slide17

PARTNERSHIPS FOR FINANCING PROJECTS

SECTOR OPPORTUNITIES

  • Transport-roads, railways & ports
  • Water and water waste management
  • Education
  • Health
  • Public Housing and Area Development
  • Prisons
  • Storage
slide18

PARTNERSHIPS FOR FINANCING PROJECTS

ROLE OF DBZ

  • King maker
  • Lead Arranger and Financier
  • Technical Adviser
  • Promotions and Advocacy
slide19

PARTNERSHIPS FOR FINANCING PROJECTS

PRE-REQUISITES AT DFI LEVEL

  • Large Capital Base
  • High Quality Human Capital
  • High Quality Technical/technological Capacity
  • Strong Risk Management Regime
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PARTNERSHIPS FOR FINANCING PROJECTS

PRE-REQUISITES AT PRIVATE SECTOR LEVEL

  • Entrepreuership-eye for opportunity
  • Good Corporate Governance
  • Technical/technological Capacity
  • Strong Risk Management Regime
slide21

Contact Details:

Development Bank of Zambia

Development House

Katondo Road

P.O. Box 33955

Lusaka

Tel: +260-21-1228676

Fax: +260-21-1222426, 1227006

Email: dbzmail@dbz.co.zm