The Development Bank of Southern Africa (DBSA) was planning to increase its lending capacity to add another R100-billion in funds over the next five years, CEO Paul Baloyi said on Wednesday.

Speaking at a presentation on the development finance institution's (DFI's) 2009 financial performance, Baloyi said that the bank could increase its lending capabilities by about 20% to 30% in terms of how it was presently structured.

However, this would not be enough to assist in funding South Africa's infrastructure programme.

He explained that the country was facing a R280-billion funding gap to sustain the economic activity in the country in the 2009/10 financial year, while a further R220-billion would be required in the same year to accelerate the eradication of infrastructure backlogs and to create jobs.

The bulk of the funding would come from government, the private sector and DFIs.

However, this came at a time when foreign investment was contracting and liquidity was in short supply and costly, he noted.

It was the role of DFIs to intervene when markets were contracting, despite these institutions facing the same adverse market conditions as other entities. This would require special determinations to deal with funding issues, said Baloyi, noting that the bank had recognised that it required greater capacity.

It had already conducted work to enhance its capital structure to enable it to access more funding off the market and has proposed a R20-billion increase in its callable capital, he said.

The DBSA would submit this proposal to Cabinet for a formal signoff soon, he added.

Further, it was also looking at interventions that would enable it to deal with the short supply and high cost of liquidity in the market.

These two efforts, together, would enable the DBSA to assist in funding the build programme that is envisaged by government, he said.

The proposed R100-billion boost in funding would allow the DFI to disburse between R15-billion and R20-billion a year in funding, compared with the R9,3-billion it had disbursed in the 2008/9 financial year.

The R9,3-billion in disbursements made in the year ended March 31, 2009, had trebled from the R3-billion in disbursements made three years before, noted Baloyi.

Meanwhile, he said that the DBSA would also look at increasing access to funding for poorer municipalities, as the country could then add value to the eradication of legacy problems that sat in those areas much more practically.

Along with this, it would also put special interventions in place under the DFI's development fund to deal with the legacy of poor maintenance on infrastructure, increasing the capacity and execution capabilities of municipalities and to deal with institutions that were in distress, said Baloyi.

DBSA CFO Pieter de la Rey noted that while the bank had continued to focus on providing funding for big municipalities and metropolitan municipalities, it was also increasing its focus on underresourced municipalities.

The DFI's net profit for the year ended March 31, 2009, had increased to R1,4-billion, 13% higher than the R1,26-billion recorded the year before.

It had spent R369-million on development activities during the year.

De la Rey noted that the impact of the DBSA's disbursement on gross domestic product (GDP) had been R10,1-billion in the year, with R6,7-billion of this benefiting South Africa's GDP.

The disbursements would also contribute about 62 500 employment opportunities in Africa, of which 37 600 would be in South Africa.