The European Union (EU) and the Development Bank of Southern Africa (DBSA) have launched the €100 million (R1.5 billion) ground-breaking Infrastructure Investment Programme for South Africa (IIPSA), to provide grant funding in support of loans for essential infrastructure projects in South Africa and the region.​

The fund was established following a joint initiative between the South African government and the EU, and forms part of the EU’s broader intervention under its country strategy for South Africa. According to EU Ambassador Roeland van de Geer, IIPSA will provide innovative financing that will blend European Union grants with long-term financing from participating South African and European development finance institutions. “It also aims to attract private financing into projects with a high socio-economic return by enhancing the financial feasibility and project quality and/or by reducing the risk associated with such projects,” he says.

Projects that will be supported by the IIPSA will be selected from an updated list of priority infrastructure projects established by the IIPSA Project Steering Committee, and will be directly linked to the priorities of South African government, EU-SA priorities for cooperation and the SADC regional infrastructure strategy. Key priority sectors include energy, transport, water and environment, ICT and social infrastructure. Projects must either be a South African project or a trans-border initiative involving two or more countries in the Southern Africa Development Community (SADC) region with a demonstrable regional impact on one or more countries, in order to be eligible for financial assistance from the IIPSA fund.

DBSA CEO Patrick Dlamini says the establishment of this fund could not have come at a better time. A lack of adequate infrastructure funding is a key constraint to faster economic growth and social inclusion both in South Africa and in the SADC region. “We are pleased that the Bank has been appointed as a fund manager to implement the IIPSA programme. We therefore, view this programme as a strategic intervention to fund South Africa’s national and regional infrastructure projects, especially at the critical initial stages to prepare projects to bankability,” he says.

The committee will issue a request for proposals on infrastructure investments whose development would be enhanced by the use of IIPSA grant funding in early April.