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Development Finance Study of SADC (1998)
The Development Finance Study of SADC of 1998 (DFS98) is one of three studies that were undertaken under the EU-funded SADC- Finance and Investment Sector Coordinating Unit (FISCU) 1998 Research Project. This study recommended that SADC creates a SADC-wide network of existing national DFIs and a Development Finance Resource Centre to support the network’s capacity building needs. The Centre was also to have a policy research and analysis capacity and offer advisory services to SADC Governments and DFIs, and was to be complemented by a Development Fund.
Establishment of DFI Network and the DFRC
As a result of the recommendation of the DFS98 study, fifteen (15) DFIs adopted a Memorandum of Understanding in May 2000, establishing the DFI Network. In August 2000, the Network agreed to establish the DFRC under a Trust Deed, and to finance its recurrent administrative expenditure from start-up, then approach Donor Agencies or Internaitonal Cooperating Partners (ICPs) for other infrastructure, technical and capacity building needs. The DFRC began operations on 1st July 2003 as the Secretariat and Central Hub for the DFI Network following approval of its establishment by the SADC Council of Ministers at their October 2002 meeting in Angola.
The DFI Network and the DFRC became protocol-based institutions of SADC, following ratification of the SADC Finance and Investment Protocol in July 2011. The FIP incoporates the Network establishing MOU as Annex 9.
Project Preparation and Development Facility (PPDF)
Also recommended by the DFS98 study was the establishment of a SADC Development Fund, and that a full feasibility study be carried out to determine the viability, sustainability and potential modus operandi of such a fund. This recommendation was implemented with a two-phase KfW-funded feasibility study, managed by the DFRC and the DBSA acting as the implementing agency.
- The first phase examined the desirability, viability and sustainability of a development fund. It began in December 2002 and culminated in a report to the DFI Network by consultants in June 2003. The study recommended establishment of a Project Preparation and Development Facility (PPDF), for the preparation, promotion and development of bankable projects. Its recommendations were adopted by Ministers of Finance on 7 August 2003 and endorsed by the SADC Council at its Meeting in Dares Salaam, Tanzania in August 2003.
- Phase two began in 2004 and examined the modus operandi, location and potential structuring of the Fund. Germany’s KfW again funded this phase of the project. A draft report was discussed with the Network DFIs and Senior Treasury Officials in January 2005, and a final report completed in May 2005.
- The third phase focused on the design for implementation of the Fund, whose objective was the establishment of an operational framework for the Fund, with specific emphasis on: the development of a strategic plan for sustainable financing of the PPDF by Member States; the development of its key internal operations and systems, including management of funds arising from diverse sources; the development of criteria for selecting and funding activities; and the development of criteria for the selection of a host institution for the PPDF in its early stages.
The DBSA was selected as host institution for hte PPDF in July 2007 and the facility has been operational through hosting MoU signed between the DBSA and the SADC Secretariat in 2008.
The DFI Network, the DFRC, the PPDF and the Development Fund consitute core structures of an emerging SADC Development Finance System.