1. Financing ICT’s Development Presentation to the Public & Private Sector Partnership Forum Kampala Uganda 31 October – 2 November 2004

2. Representatives Mr Lewis Musasike Executive Vice President, Private Sector and International Investments Cluster Tel: +27 11 313-3066 Ms. Desnei Leaf-Camp Project Manager, International Finance Unit Tel: +27 11 313-3126

3. Introduction  DBSA is a Development Financial Institution (“DFI”) wholly owned by the South African Government  DBSA is the primary vehicle for promoting infrastructure development in South Africa  Operates in the Southern African Development Community countries, focusing on infrastructure sectors supportive of economic growth  DBSA had total assets of about ZAR 23.7 bn (*US$3.6 bn) at the end of March 2004, and currently employs 500 people  SADC lending and investment portfolio has grown to ZAR 8.3 bn (US$1.28 bn)  DBSA is one of the largest DFI’s in Southern Africa Who is the DBSA? * Exchange rate of R6.5/1$

4. Vision and Mission  Vision  To further the progressive realisation of an empowered and integrated region, free of poverty, inequity and dependency  Mission  To maximise the Bank’s contribution to development by mobilising and providing finance and expertise and by establishing partnerships to develop infrastructure to improve the quality of life of the people of Africa  Triple Role  Investor  Advisor  Partner Our Goals

5. Financial Structure  Self Funding  The Development Bank is a self-funding institution and raises its funding from domestic and international capital markets, bilateral and multilateral institutions, and internally generated resources.  The Bank has access to a callable capital facility of R4,8 billion, which is part of its capital structure  Investment grade rating  Fitch: AAA: domestic rating (stable)  Moody’s: Baa2: international rating (positive outlook)  Standard and Poor’s: BBB: international rating (positive outlook)  Financial Strength (FYE 2004)  R23.7 bn total assets  R11.2 bn capital and reserves  R1.4 bn operating income Financial Structure

6. Lending and Investment Strategy  Sustainable projects  Focus on projects and programmes with maximum development impact  Job creation  Poverty alleviation  GDP contribution  Regional and Economic integration  Technical assistance for capacity building  Partnerships  Government  Private sector  Other DFIs Business Strategy

7. DBSA and its Business  Loan Finance  Long-term loans  Co-financing  Equity Finance  Limited ability for equity participation  Guarantees  Technical and preparation assistance  Non-Financial  Advisory services  Agency functions  Capacity building  Development information  Public/Private sector facilitation  Policy research, analysis and support Products and Services

8. Financing Terms and Conditions  Terms are dependent on the nature of the project and risk assessment  Maturity: Up to 20 years for Rand financing (depends on currency)  Repayment: Capital grace during construction  Ranking: Senior and subordinated debt  Fees: Upfront and commitment fees, but negotiable  Interest Rate: Fixed rate or floating rate  Currency: Rand, US, Euro  Co-financing: Aim for maximum DBSA contribution of 50% of financing needs Loan Terms

9. The DBSA and NEPAD The Bank currently supports the goals of NEPAD through:  Providing logistical support  Providing advisory services to the secretariat  The establishment of a R25 million Project Preparation Facility in partnership with Agence Française de Développement  Focus of DBSA support:  Advocacy  Policy support and agency role  Resource mobilisation  Investment within SADC Support to NEPAD Strategic objectives

10. DBSA’s SADC Portfolio Coverage R8,3 billion committed to projects in SADC (excluding South Africa)

11. Sectoral Analysis of DBSA Funding to SADC

12. Importance of ICT Sector for Development  Enables efficient business to business communications and trade  Improvement in productivity and economic efficiency  Attracts foreign direct investment  Role of information and communication in promoting good corporate governance and democracy  Information and communication as essential elements in global knowledge-based economy

13. Understanding the ICT Sector in the SADC Region  Separation of posts and telecommunications, and from Government departments  State owned public in telecommunication operators corporatised  Privatisation is slow  Liberation of telecommunications market segments (e.g. mobile; IPS, etc)  Growth in mobile services has overtaken fixed line services growth  Establishment of autonomous regulatory authorities  ICT policy and legislation relatively underdeveloped

14. DBSA’s Role in the ICT Sector  Demand for Development Finance is high  Current review of DBSA strategy on  Privatization of telecoms; digitization of fixed line networks  Implementing country specific ICT strategies  Prioritization of projects for investment  Expand current focus on communications to include information services such as broadband high-speed data transfer  Therefore two Roles  Policy and Regulation development  Provide finance for the privatisation of the ICT Sector

15. DBSA’s Capabilities in the ICT Sector  Swaziland Post and Telecoms Corporation I  Project Description: Refinancing of the upgrading of the Swaziland telecommunication network to be Y2K compliant and installation of cable/switching infrastructure. Total project cost ZAR 42.9 million  DBSA Loan: ZAR 42 million senior loan with maturity of 20 years  Swaziland Post and Telecoms Corporation I  Project Description: Expansion of switching capacity through installation of a wireless local loop system and upgrading of the billing and customer care system. Total project cost ZAR 113 million  DBSA Loan: ZAR 113 million senior loan (in 2 tranches) with maturity of 10 years  Celtel International B.V. (formerly MSI – Africa)  Project Description: Short-term corporate loan  DBSA Loan: US$ 30 million with 3 year maturity

16. DBSA’s Capabilities in the ICT Sector  Cell C  Project Description: Cell C was granted the 3 rd mobile phone license in South Africa in 2001. The funding was for rolling out the GSM network countrywide. Project cost = R7.4 billion  DBSA Loan: R300 million senior loan with 9 year maturity  Telecom Lesotho  Project Description: Corporate funding for fixed line and mobile network  DBSA Loan: R 2.9 million loan with 5 year maturity  TDM Transmission Backbone - Mozambique  Project Description: submarine optical fibre cable and corresponding transmission equipment along the Maputo – Beira line. The total project cost US$ 33 million and included financing from TDM the state-owned utility (equity) and KfW.  DBSA Loan: Limited recourse US$ 21.3 million senior loan with 12 year maturity including 2 year capital grace (Continued)

17. DBSA’s Capabilities in the ICT Sector  Maputo Network Expansion and Modernisation – Mozambique  Project Description: Expansion and modernisation of the telecom network in Maputo. The total project costs US$ 37.5 million.  DBSA Loan: Limited recourse US$ 14 million senior loan with 10 year maturity including 2 year capital grace  Celtel Zambia Limited I - Zambia  Project Description: Installation and operation of a nationwide GSM- based digital cellular telecommunications network at a total project cost of US$ 16.9 million.  DBSA Loan: US$ 4.5 million loan with 7 years maturity (Continued)

18. DBSA’s Capabilities in the ICT Sector  Celtel Zambia Limited II – Zambia  Project Description: Expansion of the existing nationwide GSM-based digital cellular telecommunications network. Total project cost US$ 11 million  DBSA Loan: US$ 3.3 million with 7 years maturity (Continued)

19. DBSA’s Capabilities in the ICT Sector  Financing of concession and privatization initiatives in fixed line telecommunications networks  Issue of Second Network Operator license  Fiber Optic installation for additional ICT services such as broadband internet, intra-bank clearances, high-speed data transfer  Projects in 5 SADC countries (Continued) PROJECTS UNDER CONSIDERATION

20. The DBSA’s Strengths  Flexible and competitive lending terms and conditions  Diverse and deep skills in development  Understanding of the region  Strong track record  Quick response and turnaround time  Strategic alliances with other DFI’s  Well capitalised, profitable and access to diverse funding sources  Investment grade ratings The ideal regional development partner

21. Contact details Development Bank of Southern Africa Registered officePostal AddressTelephone 1258 Lever Road Headway Hill Halfway House South Africa 1685 PO Box 1234 Halfway House Midrand South Africa 1685 +2711 313 3911 Fax +2711 313 3086 WEBSITE ADDRESS:www.dbsa.org