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PARTNERSHIPS FOR FINANCING DEVELOPMENT PROJECTS AND INFRASTRUCTURE CAIAPHAS HABASONDA

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

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  1. 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

  2. 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

  3. 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

  4. 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

  5. FINANCING DEVELOPMENT • Traditional Development Banking interventions • Public Private Partnerships (PPP)

  6. 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

  7. 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

  8. FINANCING GAP Evidence- congested roads, hospitals, poor sanitary facilities, dilapidated schools etc • Consequencies • Increased cost of economic activity • Lower productivity • Reduced competitiveness

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

  10. 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

  11. 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)

  12. PARTNERSHIPS FOR FINANCING PROJECTS Models • Service Contract • Management Contract • Lease • Concession • Divestiture

  13. 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

  14. PARTNERSHIPS FOR FINANCING PROJECTS BENEFITS • Allows public sector to focus on outcomes and core business

  15. 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

  16. PARTNERSHIPS FOR FINANCING PROJECTS SECTOR OPPORTUNITIES • Transport-roads, railways & ports • Water and water waste management • Education • Health • Public Housing and Area Development • Prisons • Storage

  17. PARTNERSHIPS FOR FINANCING PROJECTS ROLE OF DBZ • King maker • Lead Arranger and Financier • Technical Adviser • Promotions and Advocacy

  18. 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

  19. PARTNERSHIPS FOR FINANCING PROJECTS PRE-REQUISITES AT PRIVATE SECTOR LEVEL • Entrepreuership-eye for opportunity • Good Corporate Governance • Technical/technological Capacity • Strong Risk Management Regime

  20. 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

  21. THANK YOU

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