THE SADC REGIONAL DEVELOPMENT FUND OPERATIONALISATION: AN UPDATE PRESENTATION TO THE SADC DFI SUBCOMMITTEE BIANNUAL MEETING STUART KUFENI, CEO, DFRC

Transcription

1 THE SADC REGIONAL DEVELOPMENT FUND OPERATIONALISATION: AN UPDATE PRESENTATION TO THE SADC DFI SUBCOMMITTEE BIANNUAL MEETING STUART KUFENI, CEO, DFRC 14 TH JUNE 2013, LUSAKA, ZAMBIA

2 Background southern african 1. Since last year, the SADC Committee of Ministers of Finance and Investment (COMFI) has had several meetings, most recently in Maputo on 17 th May 2013, to discuss the operationalisation of the SADC Regional Development Fund (RDF). 2. Discussions covered various issues, among these: Objectives of the Fund; Legal Framework of the Fund; Windows of the Fund; Voting Rights; Capitalisation of the Fund; and Institutional Structures of the Fund. 3. COMFI Decisions regarding these critical areas are detailed in the following sections. 10/07/2013 2

3 1. OBJECTIVE OF THE FUND The objective of the SADC Regional Development Fund is to create a financial mechanism to mobilise resources from Member States, Development Partners and Private Sector to support regional development and deepening of regional integration as foreseen in Article 26A of the SADC Treaty. 10/07/2013 3

4 2. WINDOWS OF THE REGIONAL DEVELOPMENT FUND (i) Infrastructure window: to provide financial support for implementation of regional infrastructure projects mainly emanating from the SADC Regional Infrastructure Development Master Plan (RIDMP); (ii) Integration and Adjustment window: to support and facilitate Member States in their efforts to implement the SADC economic integration agenda (Free Trade Area, Customs Union, Common Market, Economic and Monetary Unions); (iii) Industrial Development window: to support the industrialisation process of the Region; and (iv) Social Development window: to support the human and social aspects of the regional agenda and incorporating all other related funds such as the HIV and AIDS Fund. 10/07/2013 4

5 3. LEGAL FRAMEWORK OF THE FUND An Agreement would be utilised to operationalise the Fund; The Agreement would be signed and ratified by all Member States; and Should enter into force following ratification by two thirds majority of Member States 10/07/2013 5

6 4. CAPITALISATION OF FUND a) Subscribed Capital of US$1.2 billion as seed capital b) Shareholding: Member States: 51% Private Sector: 37% Cooperating Partners: 12% c) MS contributions over a period of 5 years d) Shares not taken up reallocated by Board of Governors without compromising the 51% MS shareholding e) Optimum Authorized Capital still to be finalised but to consider callable and non-callable options and ability of MS to contribute. 10/07/2013 6

7 5. VOTING RIGHTS a) Two-tier Voting Rights Option Adopted: Basic Membership Vote: equal number of shares allocated to all Member States; and Proportional Vote: proportional to number of shares of the capital stock held by an individual MS b) No single member of the Fund shall hold more than 10 % of the votes in the Fund. 10/07/2013 7

8 6. INSTITUTIONAL STRUCTURE The Institutional Structure shall be composed of : a)the Board of Governors comprise all shareholders of the Fund and any other appointees as deemed necessary; b)the Board of Directors shall consist of no more than seven members of which four will be appointed by Ms (Troika + previous chair), c)the Chief Executive Officer shall be appointed by the BoG at the recommendation of the BoD. 10/07/2013 8

9 7. SELECTION OF PROJECTS (i) Projects that advance SADC Treaty s goal for promotion of sustainable growth; (ii) Projects that are of strategic importance to deepen the SADC regional integration agenda; (iii) Projects that will contribute to trade, industrialisation, agriculture development, employment creation, fuel economic growth and address the broad range of interconnected issues that perpetuate poverty in the Region; and (iv) Projects that provide sustainable benefits to the people and communities of the Region in general. 10/07/2013 9

10 8. INTERFACE BETWEEN THE RDF AND SADC NATIONAL DFIS. a) DFIs are recognised under the RISDP and the SADC FIP as important in the provision of finance for implementation of regional projects; b) DFIs could facilitate implementation of the RDF projects; and therefore c) COMFI approved that the Fund should work closely with DFIs in implementing projects. 10/07/

11 9. HOST INSTITUTION FOR RDF a) Fund to be temporarily hosted by an existing SADC DFI while a fully-fledged institution is being set up. b) Hosting agreement for three years renewable once. c) A DFI Evaluation Committee comprising a Double Troika (Troika is Angola Mozambique and Malawi) will be established to manage the tendering and selection process for selecting the temporary host DFI; and facilitate the identification of the permanent host country for the Fund. d) Hosting DFI Criteria approved by COMFI. 10/07/

12 10. HOST DFI ELIGIBILITY CRITERIA i. DFI is legally established, registered, operating in a SADC Member State and part of the SADC DFI Network. ii. DFI s development mandate is in line with the objectives of the SADC RDF. iii. Experience of the host DFI in financing and managing infrastructure and industrial projects. Managing of cross boarder projects will be an added advantage. iv. Experience of the host DFI in funding infrastructure and industrial projects with Cooperating Partners and Private Sector will be an added advantage. v. Cost of services to be provided by the host DFI 10/07/

13 10.1 HOST DFI TECHNICAL COMPETENCIES i. Availability of staff with competences in project appraisal, monitoring and evaluation; ii. Availability of qualified staff with competencies in: Accounting and internal auditing Treasury services Legal services Procurement Information and Communication Technology iii. The level of resources in these areas to be dedicated to the operations of the SADC RDF. 10/07/

14 10.2 HOST DFI FINANCIAL STATUS CRITERIA i. Whether the accounts of the host DFI are in accordance with international accounting standards and in compliance with international best practice. ii. If the DFI s audited accounts are available within 4 months of the end of each fiscal year. The accounts should be unqualified and published; audited financial statements of last three years should also be provided. iii. Compliance of the Host DFI with prudential standards and guidelines. iv. Financial performance of the DFI in the last 5 years in terms of capital adequacy ratio, liquidity, and solvency. 10/07/

15 10.3 ELIGIBILITY CRITERIA FOR HOST COUNTRY i. Whether the host country has a sound legal and regulatory framework for DFIs. ii. Whether the host country has a sound Information and Communications network infrastructure. 10/07/

16 THE SADC DEVELOPMENT FINANCE SYSTEM SADC Regional Development Bank SADC DFI Network Cooperation on Regional & in-country Project Financing &Resource Mobilisation SADC Regional Development Fund Infrastructure Fund Integration & Adjustment Facility Industrial Development Social Fund Project Preparation and Development Facility SADC-DFRC Capacity Building, Advisory Services & Policy Support SADC PPP NETWORK Promotion of PPP as Investment Instr. 10/07/ Page 16

17 THANK YOU 10/07/