1. REFOCUSING FOR RESULTS DBSA’S EXPERIENCE OF BALANCING DEVELOPMENT AND FINANCIAL SUSTAINABILITY Mr. Patrick K. Dlamini Chief Executive and Managing Director

2. CONTENTS Vision Mission The case for change Refocusing and restructuring Benefits for the Bank Achieving Development Results Conclusions

3. VISION A Prosperous and integrated region, progressively free of poverty and dependency

4. MISSION To advance the development impact in the region by expanding access to development finance and effectively integrating and implementing sustainable development solution to: Improve the quality of life of people through the development of social infrastructure Support economic growth through the investment in economic infrastructure Support regional integration

5. THE CASE FOR CHANGE

6. DBSA faced a number of challenges Board resolved to tackle the problems through restructuring 4

7. REFOCUSING AND RESTRUCTURING

8. Three core elements to the refocusing Reorganisation on three fronts simultaneously to restore focus and efficiency. 5

9. Revise the portfolio mix Lending in core sectors, accelerating infrastructure delivery and enhancing operational performance 6

10. Internal transformation Multiple initiatives to Improve systems and processes 7

11. Six building blocks have been identified to achieve the strategic objectives and our mission 11 Strategic EnablerRationale High Performance Culture People are our most valuable resource and we are committed to attracting, developing, retaining and rewarding the best people through the continued establishment of a challenging and exciting environment, that stimulates commitment, and encourages development and growth Balance sheet capacity Balance sheet strengthening and implement treasury strategy in order to meet the growth ambitions Partnerships Developing and leveraging our strategic partnerships and relationships to profitably expand and deepen our penetration of our selected market segments and geographic markets Strategic Partnerships enable business to gain competitive advantage through access to knowledge and project funding Distinguishing ourselves by proactively partnering with our clients and development partners to originate, plan and deliver infrastructure projects Business Intelligence Acquiring relevant actionable knowledge and understanding of our selected industry market and geographic sectors, economic business trends, clients and competitors, in order to inform quality decisions that will drive performance Operational Excellence Creating within our Group operating model and organisational structure, distinctive skills processes and operating models for the effective provision of innovative finance for development and enhanced project execution capabilities Innovative Infrastructure Solutions DBSA focusses on social and economic infrastructure development but with an emphasis on driving financial and non-financial investments in the primary sectors of energy, transport, water and communications, whilst providing support to various social sectors such as health, education and housing to a lesser extent 12345 6

12. Shareholder Support Government backing for restructuring processes Government stood behind the restricting process and agreed to inject additional capital in the amount of R7.9 billion in installments over three years starting 2013-14. Domestic financing is now focused on four core sectors. Infrastructure delivery is now concentrated in two sectors 8 TRANSPORT HEALTH ICT WATERENERGY EDUCATION

13. BENEFITS FOR THE BANK

14. Strengthening the balance sheet Basis for sustainability 11

15. ACHIEVING DEVELOPMENT RESULTS

16. Highlights Financing Total approvals of R3.2 billion and disbursements of R1.7 billion Disbursements to secondary and under- resourced municipalities increased by 141% to R815 million Planning and implementation support gaining traction 109 000 households provided access to new and improved service in water, sanitation and electricity 4 600 temporary job opportunities created Municipal financing 141% in disbursements (to R815M) to secondary and under- resourced municipalities

17. Development impact from financing Playing a pivotal role in development in SA and the region 13 Municipal Funding: Households benefited Projects supported via third party financing: Non-municipal Funding (RSA and SADC): Energy Generation Renewable: 2,588 MW (16% of funding from DBSA) Coal IPP: project preparation financing for 3,600 MW Housing Funded 120,000 units of housing (30% of project funding from DBSA) Roads Enabled 1,880km of roads (55% of project funding from DBSA) Education Student accommodation of 1,630 beds (46% of project funding from DBSA) ICT broadband cable system Two new airports in Africa and the expansion of one in South-Africa Cellular operations in the rest of Africa Various renewable energy projects 264 000 households benefiting from municipal financing, 35% of funding from the DBSA

18. Energy: Jeffrey’s Wind Farm Project 18 Project Description Jeffreys Bay Wind Farm is a 138 MW wind project. One of the largest wind farms in South Africa (with 60 wind turbines erected on 3 700 hectares) It is located between the towns of Jeffreys Bay and Humansdorp, in the Kouga Municipality in the Eastern Cape Project Size: R2.9 billion Debt: R2.2 billion (72%) Equity: R0.8 billion (28%) Project Investors Globeleq Mainstream Renewable Power Old Mutual Thebe Investment Corporation Amandla Omoya Trust Enzani Technologies Usizo Engineering Local/South African ownership : 41% Project Lenders (Debt providers) Development Bank of Southern Africa (“DBSA”) Barclays Africa/Absa Liberty Group Ltd Sanlam Life Ltd Sanlam Credit Conduit (Pty) Ltd

19. Energy: Jeffrey’s Wind Farm Project 19 DBSA Role in the Project Senior Lender: R825 million Empowerment/Equity Funder (to facilitate the acquisition of equity shareholding by BEE Investors) Thebe Investment Corporation: R68.2 million Amandla Omoya: 45.7 million Usizo Engineering: R15.2 million Enzani Technologies: R15.2 million Project Status The Project reached commercial operation date (i.e. completed construction) on 15 May 2014. Benefits (electricity, carbon emissions, water savings) Expected Electricity Production: 460 000MWh/annum Provides power to 100 000 Households per annum Annual carbon emissions avoided: 420 000 tonnes Project lifetime carbon emission avoided: 8 400 000 tonnes Water savings: 590 000 000 litres per annum Development Impact 6% ownership by the Amandla Omoya Local Community Trust (i.e. this exceeds the minimum ownership threshold of 2.5%) A % of project revenues has been allocated to be spent on socio economic and enterprise development programmes (“SED” and “ED”), over and above the Local Community Trust ownership. 80% of the allocated budget from SED and ED will be focused on education support programmes.

20. Energy: Khi! Solar One Concentrated Solar Power Project 20 Project Description Khi! Solar One Concentrated Solar Power Plant is a 50 MW solar project. The tower plant will be located on a 600 ha site close to Upington, in the Northern Cape Province. Project Size: R4.1 billion Debt: R2.7 billion (65%) Equity: R1.4 billion (35%) Project Investors Abengoa (Spanish Company), Industrial Development Corporation, !Khi Local Community Trust Local/South African ownership : 49% Project Lenders (Debt providers) Development Bank of Southern Africa (“DBSA”) Sanlam Credit Conduit (Pty) Ltd International Finance Corporation, Industrial Development Corporation, European Investment Bank (“EIB”), Praparco & FMO

21. Energy: Khi! Solar One Concentrated Solar Power Project 21 DBSA Role in the Project Senior Lender: R500 million Project Status The Project is currently under construction Benefits (electricity, carbon emissions) Expected Electricity Production: 172 000 MWh/annum Provides power to 37 400 Households per annum Annual carbon emissions avoided: 183 000 tonnes Project lifetime carbon emission avoided: 3 660 000 tonnes Development Impact 20% ownership by the !Khi Local Community Trust Local Community Trust (i.e. this exceeds the minimum ownership threshold of 2.5%) A % of project revenues has been allocated to be spent on socio economic and enterprise development programmes (“SED” and “ED”), over and above the Local Community Trust ownership.

22. Regional financing R3.6Bn in funding disbursed to SADC to promote regional integration 14 Multi-country R0.6Bn disbursed Zimbabwe R700M Angola R2.1Bn Zambia R200M

23. Infrastructure Delivery Transforming rural communities 15 Replacing mud schools Building rural housing

24. CONCLUSION

25. Balancing development and financial sustainability Lessons from the DBSA experience DFIs are expected by their government shareholders to scale up their contribution to development It is proper that our shareholders and the communities we serve should have high expectations of us, give us stretch targets and make us strive for excellence. The danger lies in going too far to satisfy those expectations and loosing focus. Ultimately that ends in institutional collapse. DBSA has gone through a journey to refocus and restructure. It involved a hard look at ourselves and admitting that there were things be fixed. Parts of the journey were painful, specifically the headcount reduction although it was entirely voluntary. That journey has give us wisdom on how to work smarter to improve our pricing, streamline decision making and provide better value to our clients. At the heart of our financing model is a portfolio approach which recognizes that our development core extends into activities that are a net cost for the Bank and these must be covered by sustainable financing activities. Additional development mandates must be accompanies by cost recovery. Positive results are flowing from our strategy. We are encouraged we can do more in future. 16

26. THANK YOU