DBSA Project Preparation Fund

The DBSA Project Preparation Fund supports infrastructure projects through funding the preparation of projects that fall short of the needs of both the public and private sector, as in most cases sponsors do not have funding available to prepare projects to investment stage

Development Bank of South Africa (DBSA)
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About

The DBSA Project Preparation Fund supports infrastructure projects through funding the preparation of projects that fall short of the needs of both the public and private sector, as in most cases sponsors do not have funding available to prepare projects to investment stage. As a DFI, the DBSA is positioned to take on early-stage risk where commercial banks are reluctant to take on this risk.

  • Co-funding: Project sponsors & developers are required to fund a significant portion of the requested project preparation amount. Any historical costs incurred by the project sponsor will not be eligible to be included as their contribution to the required funding.
  • Return based approach: The DBSA will seek to recover the project preparation funding provided for projects which are determined to be bankable. The DBSA will provide project preparation funding on commercial terms for private sector led infrastructure projects and seek to recover the capital and earn the return on financial close. On funding to municipality-led infrastructure projects, the DBSA seeks to earn affordable returns on the funding provided; this could be achieved through blending DBSA funds with concessionary/grant funding from strategic partners.
  • Other: The DBSA will seek to act as the Mandated Lead Arranger (MLA) for the projects for which it has provided project preparation funding and to arrange the debt funding for the project on a best efforts basis, provided that the commercial terms of the appointment are competitive and market-related.
  • Cost exclusions: Certain costs (e.g. debt service charges, currency exchange losses, salaries, travel & accommodation) shall not be considered eligible for funding through the DBSA Project Preparation Fund.

Assistance Criteria

The DBSA evaluates projects based on several key criteria:

  • Bankability: Projects must demonstrate financial viability and the potential to attract long-term capital.

  • Sector Alignment: Projects should align with DBSA’s mandate, focusing on infrastructure development within energy, health, ICT, transport, water and sanitation, and climate mitigation sectors.

  • Development Impact: Projects must contribute to regional integration and address current infrastructure priorities in the Southern African Development Community (SADC) region.

  • Organisational Capacity: The applicant’s ability to manage and implement the project effectively is assessed, including governance structures and institutional arrangements.

  • Technical Quality: Proposals are evaluated for their technical feasibility, sustainability, and alignment with best practices .

Countries

Support

Preparation support in this context can be defined as financial support to create capacity and guidance to prepare projects for investment, by the public and private sector or a combination thereof.

The DBSA offers comprehensive support throughout the project preparation phase:

  • Financial Support: Funding for feasibility studies, environmental and social impact assessments, and other preparatory activities.
  • Technical Assistance: Provision of expertise in areas such as project structuring, legal and financial advisory, and procurement processes.
  • Capacity Building: Establishment and capacitation of Programme Management Offices (PMOs) to oversee project implementation.
  • Transaction Support: Assistance in structuring equity and debt financing, including legal structuring and negotiation of agreements.

This support aims to de-risk projects and bridge the gap between capital and finance, ensuring that projects reach financial close and are successfully implemented

 

Application Process

To apply for the DBSA Project Preparation Fund, project sponsors must complete the online application form available on the DBSA website. The application requires detailed information, including project description, objectives, financing plan, and environmental and social impact assessments. Applicants are also required to provide supporting documents such as feasibility studies, governance structures, and stakeholder engagement plans. It’s important to note that the DBSA seeks co-funding from project sponsors and developers, who are expected to contribute a significant portion of the preparation costs. Historical costs incurred by the sponsor are not eligible as their contribution. Additionally, certain costs like debt service charges, currency exchange losses, and salaries are excluded from funding eligibility