I have been a member of the Board of the Development Bank of Southern Africa for about a year now. It has been an amazing learning experience, mainly because it has exposed me to the enormous challenge of using large highly regulated institutions with considerable investment capital to drive a transformative developmental process. Many outside these institutions criticize them for being too slow and too narrowly focused on financial flows in technocratically defined bricks and mortar infrastructures without adequately dealing with human development and capacity issues. Many of these criticisms may be correct, but these critics do not always appreciate the limited room for maneuver that is available. On the one hand there is the enormous amount of energy and time that goes into simply running them – human resource development, financial reporting, performance reporting, strategy development, institutional re-organization, stakeholder relations and so on. On the other is the shear brute challenge of turning developmental ideas into fundable projects – what is referred to in the DBSA as “project preparation”. So few are aware of what it really takes to translate a developmental idea by a local government or development agency into a fully-fledge project proposal that can be brought before decision-makers. These processes are fraught with instabilities and delays, while the financial year marches on relentlessly, often resulting in more money available for lending than what can be absorbed by projects in the “pipeline”. One answer, of course, is to enlarge the project preparation team, but the staff required by such a unit are highly skilled and often earn much more in the private sector locally and internationally than what they can earn at the DBSA (which, by the way, pays very good salaries). Then there is the challenge of measuring the developmental impact of projects using indicators that align with the developmental strategy of the DBSA. Indicators so often seem comprehensive, but they are a blunt instrument because highly complex developmental processes need to be reduced into quantifiables that in the end lose the ‘feel’ of the project, often missing what is most important about any developmental project which is all about the ‘human factor’, consciousness and capabilities. All very tricky stuff, giving me a new sense of sympathy for those who do their best every day to make a difference via these large development finance institutions.
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Well said Mark. Few realise what goes into the realisation of idealistic policy initiatives.
Very interesting insights Mark. Whilst grappling with all these challenges you mention, the DBSA has seemingly been constantly reinventing itself. This resulting in numerous restructuring efforts, for good reason I suppose. I agree that there is some good work by and large that goes into such institutions and this should be encouraged and supported.
It was good seeing you yesterday at the Bank. Enjoy the journey. I’m sure the Bank will benefit from your insights Prof.
Mark Swilling thanks for sharing this. As primarily an institutionalist I have some understanding fot the confounding institutional challenges also related to the compliance driven nature of operations given our context of corruption. Not that is seems to put off the corrupt resulting in the non corrupt facing the double jeopardy of having to comply, then not to receive the benefit while the corrupt seems to move along and gain irrespectively. Maybe triple jeopardy here? In any case I am also interested in the implications of the note on high salaries (and benefits, I assume?) In terms of efficiency and effectiveness it will be interesting to have information on some productivity metrics of the DBSA such as the ratios of personnel expenditure to operational and capital expenditure and the percentage of income spent on projects related to total income? There are also other management information indicators for effectiveness and efficiency. I would hypothesise, subject to the evidence, that this institution, like so many institutions will benefit from a proper (as is required) stakeholder benefit rather than shareholder (and employee) benefit analysis. Perhaps you can introduce this if it is not there already. And if the findings can then be made public and transparent we will be meeting our aspirations so adamantly stated in some of us’s small contribution to advocating for a new South African ethos in the 1980’s and 90’s. With regards. Erwin Schwella
Thanks for info helps understanding
indeed very interesting…
Ah, the projectisation of development…logframes, metrics, indices…designed to rationalize away the unpredictable…and if social change is an unpredictable, emergent property of social systems, can such approaches really facilitate transformation, except perhaps by accident?
Indeed few appreciate all the inborn encumbrances which hobble a very good dream these institutions represent. But of course it is also fair to appreciate human frailty which has been visited upon these simultaneously.
Mark few on the left appreciate what is involved in running even a small formal enterprise.
What about some type of incubator that is strategically aligned with the DBSA and specifically prepares projects to be able to receive DBSA funding? 🙂
Ok, we empathise with your predicament. So now what?
Dear Mark Swilling I was employed at DBSA in the past and all I can comment is “You Know!”. I once learned that it needed up to 31 signatures to approve some projects. However, allow me to give some pointers, which I’m sure you know already: (1) There must be a SOP (standard operating procedure) for project preparation. Moreover, it must be followed to the hilt with checklists and verifications submitted with the proposal. A SOP will ensure that activities that can be processed concurrently are known, the critical path is identified and the earliest and latest completion dates are known. (2) Consider a Project Acceleration Team (PAT). The sole mandate of this team should be to monitor progress against the SOP, identify bottlenecks and deploy the correct skills to unlock the bottleneck. Industrial engineers are ideal candidates for such a team, it should have a good understanding of PERT and a good capability of utilizing planning, monitoring and evaluation tools. They should be like expeditors or chasers on a production line. (3) Standards and standardizations will also assist the process. (4) In the case of municipalities, a lot of the work redone by officials are actually meant to be a part of the IDP of the municipality. In fact, if a project is not in the IDP, it is technically an un-authorized expenditure. The IDP undergoes a rigorous process from ward level right up to the MEC. It goes through many technical teams and committees before it is eventually subject to provincial supervision. The IDP guidelines, framework and regulations require that the developmental impact (including job creation), financial plan and financial implications over the MTEF should be included. If this is done well in the first place, it need not be duplicated. Moreover, the entry level criteria should be that the project is in the IDP. This should be so for all s24-27 and s29 projects (of the Constitution). (5) Perhaps the DBSA must fund a research project to determine what delays in service delivery and infrastructure is actually costing the state (examples are R4bn roll- over of DHS, delays in roads projects, delays in procurement, etc.). This will produce good management decision making information on whether the project preparation team must be increased or not. (6) Lastly, the NDP envisages a capable state. Over and above this, what I believe must prevail is what I call “Public Service Activism”. In addition to aptitude, a particular brand of attitude is required. A mindset of “corporatization” is creeping into state organizations which is telling on the risk appetite of the state. The greater the developmental impact of a project, the greater our risk appetite should be. Sometimes we spend so much on mitigating risk to the detriment of development. This is so because we have not priced NON-DEVELOPMENT. I rest my case!