Development Bank of Southern Africa Leads Energy Sector Investment Mission

The Development Bank of Southern Africa is participating in the Africa Energy Sector Inward Buying and Investment Mission. It's happening in partnership with the Department of Trade, Industry and Competition. And joining me for more on the analysis and what to expect is Mpho Kubelo, he's the Chief Risk Officer and Acting CEO at the DBSA. Mpho, thanks so much for your time. First of all, I just want to reflect on the climate that this inward buying mission is taking place. I mean, it is happening under a new minister of the DTIC as well as the formation of the Government of National Unity here in South Africa with its current strategy on energy. How has that in any way influenced or affected what is and what may be announced at this mission this time around? Thank you very much. And good morning to your viewers. I really think that we are not expecting to see a lot of changes coming through. I think there's going to be continuity of policy in terms of how South Africa engages with the rest of the continent. So we are not really expecting that we're going to see a lot. I mean, in the energy side, we know that there's going to be continuity in terms of the ministers. The Minister of Electricity has been reappointed to that portfolio with expanded responsibilities in terms of energy. So essentially, this Energy Forum being hosted for the week and just speaking to the broader problem of the continent in which more than half of Africans don't have access to power. So what will change at this time in terms of what you're trying to achieve? So what we're trying to achieve really is to explore partnerships with various players in the power space in terms of the energy space on the continent. I mean, the DBSA is a funder and then we have the DTIC that is involved as well. We have a couple of other agencies of government that are involved. The idea really is to say, how do we look for projects on the continent that South Africa we can service? The DBSA has a good footprint on the continent in terms of funding. I mean, outside South Africa, we are very active on the rest of the continent, particularly Sub-Saharan Africa. And we think this gives us an opportunity to get to know what projects are there and what we can do in partnership with the developers of these projects. And really, I think the success for us is going to be when we come back in a year's time, how many of these projects have we moved along and that we are not just talking about project identification, but we can talk to the projects that we have moved along. Can you give me just a bit more details then on the current project pipeline and perhaps even the prospective pipeline for the DBSA? Yeah. Look, we have a good pipeline of energy projects on the continent here in South Africa and going forward. I mean, if we look at the South African market itself, we know that there's a lot of challenges around transmission. So we are working very closely with the Department of Energy. We are working very closely with ESCOM, National Treasury and other role players in terms of seeing how we can solve that particular issue. On the continent, we are seeing a good flow of projects in terms of requests for the DBSA to get involved in energy over and above where we are currently. I mean, already we have a very good portfolio of energy projects on the continent, as well as in South Africa. But we continue to see a good pipeline of projects that are coming through from various parts of the continent. Right. Because right now, the direction and the push is to go green. And there is an emphasis on renewable energy projects as all countries just try to make sure that they take off their carbon emission targets. But with that said, there's still a recognition of the dominant energy source and the many communities that rely on this energy source for their livelihoods, being quite a lot of fossil fuels in Africa, i.e. coal. Just your take then, and just whether the DBSA is looking at such projects right now? Yeah. So where we are as the DBSA is about two or three years ago, we issued a statement in terms of our net zero strategy and how we transition to net zero. We do recognize that fossil fuels do play a role, but whatever project we fund has to be accompanied by a clear and unambiguous transition statement and transition plan, not just a statement, but a transition plan by whomever we are going to fund. We have not really seen a lot of fossil fuel projects coming our way. What we see mostly is renewable projects. It's projects that really are helping us get to a carbon neutral position and de-intensify the amount of carbon that is there. But if we were to be confronted, I mean, if someone came and presented to us a non-renewable energy project, we would then want to see how do they transition, how do we get to net zero by 2050, which is what we have committed to in terms of support for the countries and D.C. as well. Okay. And in terms of financing, you do, or it is written in the DBSA statement that this year you are looking to leverage quite a lot more on diverse funding from investors to support the huge energy infrastructure needs, of course, that align with the National Development Plan of 2030. Can you just give us a bit of color then on these diverse funders or these diverse investors and how how they compare to the current partnerships you currently have? Yeah, look, our model really is to work with other funders on the continent. I mean, the DBSA has been funding on the continent now in excess of 20, maybe 25 years. And we think that we have built very strong and deep expertise in terms of how to do funding of infrastructure on the continent. We have built some very good partnerships as well, not only with African institutions, also international institutions on the continent. And we think it's about really continuing to leverage those partnerships. It's about also tapping into other markets, seeing if we cannot attract other investors that are interested on funding on the continent and even raising our own funding as well. We're looking at ways of how do we diversify our own sources of funding so that that capital can then be deployed on the continent. So we think that there's quite a lot of money that is out there that is looking for projects on the continent. And it's for us to go out, use our understanding of the continent, the expertise that we have, and the history that we have on the continent to start looking for other people that can partner with us in this project. So would you say, I mean, I'm looking at the statement once again, 1,200 projects on a database, approximately 249 billion US, the value of those projects. So, I mean, when you talk about quite a lot of money out there in the space, would you say that there's more money than there's projects right now or more projects than there's money? Because an often thing that also gets cited as a constraint to doing a lot more in the space is the number of bankable projects available. No, absolutely. And that's the problem. Money is not really the big issue. The big issue is finding bankable projects. And this is why the DBSA has a project preparation facility that we do assist project sponsors around in terms of bringing the projects that they are working on to bankability. And we're not the only ones on the continent that are doing project preparation. We do have other players on the continent, the African Development Bank does do their day, the African Finance Corporation, a number of other players do project preparation. So, we think that if we can all pull together, if we can collaborate in terms of how do we see, seeing how we can bring this project to bankability, then it becomes a lot easier to get direct debt, equity and other structures to come in once these projects are bankable. Okay. Well, we look forward to hearing the final outcomes. But as we do note, it's a week-long conference. We look forward to hearing the announcement of the deals and interrogating them thereof. But we'll leave it there for now. So, Mpo Kwero, Chief Risk Officer and Acting CEO at the Development Bank of Southern Africa.

CNBC Africa is joined by Mpho Kubelo, Chief Risk Officer and Acting CEO at Development Bank of Southern Africa for this discussion. 

DBSA hosts inward buying mission & investment mission

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DBSA hosts inward buying mission & investment mission

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