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Contents Section A - Green Fund
Section B - Team
Section C - Fund Manager’s Report
Section D - Annexures
Foreword: Director-General
05
Vision, Mission, Guiding Principles
07
Background and Objectives
08
Management Committee
12
Green Fund Team
15
Report Overview
18
Operations Overview
20
Green Fund Governance
28
Green Fund Monitoring and Reporting
28
ANNEXURE 1: Annual Financial Statements (01 April 2012 - 31 March 2013)
31
ANNEXURE 2: Green Fund Project Portfolio
46
ANNEXURE 3: Green Fund Appraisal Process
49
3
Section A Green Fund
4
Section A | Green Fund | Foreword: Director-General
Foreword: Director-General
“
The Green Fund represents a critical resource mechanism to transition to a low carbon, resource efficient and pro-employment growth path. Ms Nosipho Ngcaba Director-General Department of Environment Affairs
Green Fund | Annual Report | 2012 / 2013
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Section A | Green Fund | Foreword: Director-General
Foreword: Director-General (continued) South Africa views a green economy as a sustainable
varying scales. As at 31 March 2013, the Fund has
projects as opposed to substituting or crowding out
development path addressing the interdependence
committed funding to 13 projects, valued at R330
private investment. To this end, the Fund recognises
between economic growth, social protection and
million, while a further 32 projects were undergoing
that private sector participation is central to
the natural ecosystem. This vision is supported by
due diligence processes.
sustainable economic activity, therefore it actively
government’s policy framework and is articulated in
fosters, facilitates and where possible, incentivises
the National Strategy for Sustainable Development
The Fund has seen considerable investment in
the participation of private sector in the transition to
and Action Plan (2014), the New Growth Path
waste and renewable energy technologies, water
a green economy.
(2020) and National Development Plan (2030). The
management, and sustainable land use management
establishment of the Green Fund in 2012, to provide
initiatives. While the Fund is strategically positioned
I look forward to the continued growth of the Green
catalytic finance to innovative green interventions,
to generate the knowledge and understanding of
Fund and to the development of the much-needed
seeks to inform and strengthen Government’s vision
the green economy, it is also committed to advance
evidence base which will support the creation of an
of transitioning to a green economy.
the creation of decent green jobs. The current
enabling environment for future investments in the
Green Fund project portfolio as of 31 March 2013, is
green economy.
The Green Fund represents a critical resource
expected to yield 2808 employment opportunities
mechanism to transition to a low carbon, resource
in the areas of skills development and training,
efficient and pro-employment growth path. In 2012,
ecotourism growth and development, green
the Department of Environmental Affairs received
enterprise development, and sustainable land
an allocation of R800 million from the National
management.
Ms Nosipho Ngcaba
Treasury for a three year period (2012-2015) for
Director-General
the establishment of the Green Fund. Since its
Private sector interest in the conceptualisation of
establishment, the Fund has supported a variety
the green economy has also been notable. The Green
of innovative and catalytic initiatives that have
Fund aims to unlock barriers, address market failures,
the potential to be replicated and implemented at
stimulate and create new investment in green
Green Fund | Annual Report | 2012 / 2013
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Department of Environment Affairs
Section A | Green Fund | Vision, Mission, Guiding Principles
Vision, Mission, Guiding Principles Vision
Guiding Principles
To support the transitioning of the South African
The Green Fund provides finance for initiatives on the
economy to a low carbon, resource efficient and
basis of principles that include the following:
and unique in the green economy space, which can relate to innovation in technology, business model,
climate resilient growth path • Relevance: demonstration of distinct
Mission
• Innovation: demonstration that the initiative is new
institutional arrangements, or financing approach
environmental, social and economic benefit • Scale up and/or replication: demonstration that the
To provide catalytic finance to facilitate investment in
• Additionality: demonstration that there is sufficient
green initiatives as a critical resource mechanism to
scope for complementing the resources that
achieve a green economy
are available to an initiative, and to stimulate investment by other participants in the green economy
Green Fund | Annual Report | 2012 / 2013
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initiative has the potential to be rolled out to other sites and/ or to be implemented at a large scale.
Section A | Green Fund | Background and Objectives
Background and Objectives Background
This commitment has been reinforced by the
ideas, and where those exist to provide the catalytic
establishment of the Green Fund, aimed to introduce
funding required to initiate project implementation.
South Africa is one of the few developing countries
and test a finance mechanism that will provide
with a fiscally supported fund geared to support the
catalytic finance support to a variety of interventions
It is envisaged that the Green Fund will demonstrate
transition to a Green Economy. This achievement
(projects, research & policy development and
replicability and scale-up of impact through:
has been made possible through the combined
capacity building initiatives) to inform the
efforts of the Departments of Environmental Affairs
government’s vision of transitioning to a green
(DEA), National Treasury (NT) and the Development
economy.
programmes and projects • Reinforcing climate policy objectives through green
Bank of Southern Africa (DBSA). The need for a Fund to support the transition to green economy
In 2012, the Department of Environmental Affairs
was identified in a 2010 process led by the Green
(DEA) received an allocation of R800 million from
Economy sub-committee of the Economic and
National Treasury for a three year period (2012 -
Employment Cluster with the involvement of DEA,
2015) for the establishment of the Green Fund. The
DBSA, Economic Development Department (EDD) and
Development Bank of Southern Africa (DBSA) has
the Industrial Development Corporation (IDC).
been appointed as the implementing agent of the
The South African Government’s vision of a greener and more sustainable economy is inherently
• Promoting innovative and high impact green
interventions • Building an evidence base for the expansion of the green economy, and • Attracting additional resources to support South Africa’s green economy development.
Green Fund.
Green Fund Focus Area
Objectives of the Green Fund
The focus area of the Green Fund is defined through three thematic windows. The window design reflects
supported by government’s policy framework and particularly articulated in the National Strategy
The objectives of the Green Fund are to identify and
the policy priorities in the National Development
for Sustainable Development (NSSD), the NSSD
promote innovative initiatives that have the ability to
Plan, the New Growth Path and the National Strategy
Implementation Plan and the National Climate
be replicated and implemented on a wider scale. Thus
on Sustainable Development.
Change Response adopted by Cabinet in October 2011.
the focus of the finance is to incubate innovation and
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Section A | Green Fund | Background and Objectives
Background and Objectives (continued) Funding Windows through which project proposals
Green Fund Products
Strategy. The financial instruments encourage risk
are solicited are as follows:
sharing through co-investment and seek multiple The Green Fund offering across the thematic
outcomes including a reasonable financial return. The
Green Cities and Towns (GCT) – The vision of the
windows supports project development and/
instruments are as follows:
GCT window is to strive for well run, compact and
or investment in high impact green projects and
efficient cities and towns that deliver essential
programmes, capacity building in green initiatives
• Grants (recoverable and non-recoverable)
services to their residents, utilising available natural
and research and development initiatives that feeds
• Loans (concessional rates and terms)
resources efficiently and sustainably.
into policy and regulatory environment for the green
• Equity
economy.
Fund Establishment
Low Carbon Economy (LCE) – The vision of the LCE window is to strive towards a low carbon growth
The fund allocation for the three products is as
trajectory in line with national climate change policy
follows:
The operationalisation of the Green Fund required
principles.
the establishment of an Investment Team, a Product Offering
Allocation
dedicated Secretariat for the administration, and
Environmental and Natural Resource Management
Project development
75%
governance structures including a Management
(ENRM) – The vision of the ENRM window is to strive
Capacity building
20%
Committee and a Government Advisory Panel. Green
for protected and conserved resources for sustained
Research and development
5%
Fund Staff assumed duty between August 2012 and
development.
February 2013.
Funding Instruments The Fund aims to disburse funds in the areas of
The Management Committee was established in
project development (75%), capacity building (20%)
In order to achieve the goals of the Green Fund, a
April 2012 to provide strategic oversight for the
and policy development (5%) across the thematic
suite of financial instruments have been designed
implementation of the Fund in addition to approving
windows.
and incorporated within the Fund’s Investment
funding of all project proposals. Terms of Reference
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Section A | Green Fund | Background and Objectives
Background and Objectives (continued) have also been adopted detailing roles and responsibilities of members.
The Management Committee meets at least quarterly and is chaired by the Director-General of the Department of Environmental Affairs.
The members of the Management Committee are made up of management from the Departments of Environmental Affairs (DEA), National Treasury (NT) and the Development Bank of Southern Africa (DBSA).
Green Fund | Annual Report | 2012 / 2013
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Section B Team
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Section B | Team | Management Committee Members
Management Committee Members
Ms Nosipho Ngcaba
Mr Devan Naidoo
Mr TP Nchocho
Ms Lize McCourt
Chairperson
National Treasury Representative
DBSA Representative
DEA Representative
Mr Alf Wills
Mr Michael Hillary
Mr Ricardo Andrews
Mr Mohale Rakgate
DEA Representative
DBSA Representative
National Treasury Representative
DBSA Representative
(alternative)
(alternative)
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Section B | Team | Management Committee Members
Management Committee Members (continued) Additional Mancom Members during the year under review (served until January 2013)
Mr Ravi Naidoo
Green Fund | Annual Report | 2012 / 2013
Ms Dorah Nteo
Mr David Jarvis
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Section B | Team | Management Committee Members
Management Committee Members (continued) GOVERNMENT ADVISORY PANEL (GAP)
FUND ADMINISTRATION The Green Fund is administered by the Development
In addition to the Management Committee, a
Bank of Southern Africa (DBSA) and is housed within
Government Advisory Panel was established in July
its Financing Operations Division headed by the
2012, to advise on the positioning of the Green Fund
Group Executive, Mr. Michael Hillary, and General
and to share information with relevant departments
Manager of the Project Preparation Funds Unit led
of the range of greening initiatives across
by Mr. Mohale Rakgate who has overall oversight
government.
responsibility.
The Government Advisory Panel is made up of
Mr. Olympus Manthata, the Fund Manager, is
officials from the departments of:
responsible for the management of the Fund and
• Environmental Affairs (DEA),
is assisted by Ms Michelle Layte, the Secretariat
• Science and Technology (DST),
Manager, for the secretariat and policy advisory
• Economic Development Department (EDD),
services of the Fund.
• Trade and Industry (the DTI), • National Planning Commission (NPC), • National Treasury (NT), • Performance Monitoring and Evaluation (Presidency), and the • Development Bank of Southern Africa (DBSA).
This structure meets on a bi-annual basis.
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Section B | Team | Green Fund Team
Green Fund Team
Mr Olympus Manthata
Ms Michelle Layte
Mr Innocent Siziba
Mr Mahommed Tilly
Investment Manager
Secretariat Manager
Portfolio Manager
Principal Investment Officer
Ms Eugenia Masvikeni
Ms Li-Long Huang
Mr Riaan Fourie
Ms Najma Mohamed
Principal Investment Officer
Financial Analyst
Environmental Analyst
Policy Advisor
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Section B | Team | Green Fund Team
Green Fund Team (continued)
Ms Nomsa Zondi
Mr Edwin Maitho
Mr Aubrey Maredi
Policy Advisor
Legal Advisor
Fund Accountant
Ms Sandra Setlhoke
Ms Christina Rolin
Fund Administrator
Consultant
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Section C Fund Manager’s Report
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Section C | Fund Manager’s Report | Report Overview
Report Overview
“
The Green Fund is poised in the coming 2013/2014 year and beyond, to play a very significant role in catalysing South Africa’s transition towards a green economy.
Mr Olympus Manthata Investment Manager Green Fund
Green Fund | Annual Report | 2012 / 2013
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”
Section C | Fund Manager’s Report | Report Overview
Report Overview (continued) The scope of the review is for the period 1 April 2012
Proposals at the end of October 2013 that the Fund
to 31 March 2013. The inception of the Green Fund
was able to begin to make significant strides and
was confirmed by the signing of the Memorandum
concentrate energies, whilst still focusing on fund
of Agreement between the Department of
establishment work towards building its pipeline of
Environmental Affairs (DEA) and the Development
green projects.
Bank of Southern Africa (DBSA) on 12 April 2012. Despite the challenges and inherent time constraints The key activities focused on during the year under
associated with fund establishment, the Fund was
review were the operationalisation and establishment
able to commit funding to 13 projects as the 31st
of the Fund and building up a pipeline of projects
of March 2013. Furthermore, with a pipeline of 32
through a public solicitation process.
projects undergoing due diligence, as well as a more pronounced shift towards the active origination of
Operationalisation of the Fund took a fair amount
additional very high impact projects in line with the
of the 2012/2013 financial year, particularly the first
investment strategy, the Fund is poised in the coming
half of it. Key to this process was the building up of
2013/2014 year and beyond, to play a very significant
the team and putting in place appropriate investment
role in catalysing South Africa’s transition towards a
processes and systems and finalising the investment
green economy.
strategy for the fund.
The Fund started off with a piloting phase of an initial set of projects transferred from the DEA, in July 2012. It was only during the latter part (quarter 3) of the financial year, on the back of a Request for
Green Fund | Annual Report | 2012 / 2013
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Section C | Fund Manager’s Report | Operations Overview
Operations Overview
590 applications amounting to
The response for green finance assistance has
2. Government Advisory Panel (GAP) Projects:
been overwhelming and confirms market interest; 590 applications amounting to R10,9 billion were
Members of the GAP were invited to submit projects
submitted for projects in the following sectors:
for consideration by the Green Fund. Of the seven
renewable energy, new technologies for converting
projects presented, only one was approved for due
waste into energy, systems for efficient water
diligence and a further two required additional
management, biodiversity conservation, testing
information from applicants. Only one project has to
cleaner manufacturing technologies and modelling
date been approved for funding.
for sustainable city planning.
R10,9 billion were submitted
Total Commitment
Total Disbursements
Overall Project Portfolio:
R 15 million
R 9.3 million
1. Green Fund’s Initial Projects:
3. Green Fund’s first Public Request for Proposals
Project Pipeline Solicitation
(RFP) A total of 11 projects were recommended for due
An initial set of pipeline projects were drawn from
diligence, of these all except one required further
The Green Fund‘s first request for proposals (RFP)
an initial call for proposals advertised by DEA in July
work before contracting. A total of eight projects
was opened on the 21st of September 2012 and
2012. In addition, a public Request for Proposals
were approved for funding.
closed on the 24th of October 2012. Due to high demand a total number of submissions to 590
(RFP) was widely advertised in September 2012 until 24 October 2012 requesting project proposals in the
Total Commitment
Total Disbursements
applications. The total funding requested for the 590
thematic funding windows identified.
R 231.4 million
R 10.1 million
applications was R10.9 billion.
Green Fund | Annual Report | 2012 / 2013
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Section C | Fund Manager’s Report | Operations Overview
Operations Overview (continued) Geographic spread of the 590 applications:
Thematic Window spread of the 590 applications:
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Applicant Type spread of the 590 applications:
Section C | Fund Manager’s Report | Operations Overview
Operations Overview (continued) Focus area spread per Thematic Window:
Green Cities & Towns: Sectors
Green Fund | Annual Report | 2012 / 2013
Environmental & Natural Resources : Sectors
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Low Carbon Economy: Sectors
Section C | Fund Manager’s Report | Operations Overview
Operations Overview (continued) 4. Investment Evaluation – A Two Phased Approach
Geographic Spread of the Projects Considered
Total Project Budget
R438,7 million
in Quarter 3
Amount Requested from GF
R299,9 million
Amount Recommended by GF
R155,6 million
Due to the relatively high number of applications received the evaluation process was done into two phases. Approximately half of the applications were prioritized for first phase evaluation and the rest
Geographic spread of projects considered in
were deferred for second phase evaluation. The
Quarter 4
first evaluation phase was completed and shortlisted applications were presented to the Green Fund Management Committee (Mancom) in quarters 3 and 4 of the financial year.
The diagram and table below indicates the geographic spread and funds requested for the shortlisted projects considered by Mancom in quarter 3.
Total Project Budget
R648.4 million
Amount Requested from GF
R455 million
Amount Recommended by GF
R304.4 million
The diagram and table below indicates the geographic spread and funds requested for the shortlisted projects considered by Mancom in quarter 4 (22 January 2013):
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Section C | Fund Manager’s Report | Operations Overview
Operations Overview (continued) Total Funding request for Projects currently under
also prominent within the Green Cities and Towns window and in line with expectations applicant types are skewed
Due Diligence:
towards municipalities.
A total of 32 RFP proposals were approved for
It should however be noted that the set of 13 approved projects mainly consists of the initial pilot projects and hence
due diligence and are being processed. Of the 32
might not necessarily give an accurate representation of the envisaged approvals from the 590 application received
proposals, 6 proposals (after completion of the due
from the RFP.
diligence exercise) were presented to Mancom on
Approved Projects: Sectors
the 21st February 2013. Of the 6 proposals, 4 were approved for funding and 2 were sent back for rework. The total funding requested for all the projects under due diligence is R392 million.
Projects approved for Funding
13 projects (8 initial projects, 1 GAP project and 4 RFP projects) have been approved for funding. Of those approved projects, it can be noted that energy (both renewable and energy efficiency) applications are dominant in both the Green Cities and Towns and Low Carbon Economy windows. Energy Efficiency, currently skewed towards municipal streetlight retrofitting, has also taken a sizeable portion of the approved funds. Waste Management applications are
Green Fund | Annual Report | 2012 / 2013
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Applicant Type: Approved Projects
Section C | Fund Manager’s Report | Operations Overview
Operations Overview (continued) Funding Per Window : Approved Projects
Financial Instruments - Approved Projects
Total commitments and disbursements for approved RFP Projects:
Total Commitment
Total Disbursements
R 84 million
R 15. 7 million
Total consolidated Commitments and Disbursements for 2012/13 financial year:
Green Fund | Annual Report | 2012 / 2013
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Total Commitment
Total Disbursements
R 330 million
R 35.1 million
Section C | Fund Manager’s Report | Operations Overview
Operations Overview (continued) A total of 155 applications were successfully
Research applications submitted by private sector
submitted valued at R 1,6 billion. Market interests in
(42%) and NGO (23%) applicants constituted 65%
The Green Fund’s 2nd Request for Proposals (RFP),
the thematic windows were as follows, Green Cities
of the applications received. The remainder were
“Research and Policy Development to Advance
and Towns (35%) received the highest number of
submitted by research institutes (17%), universities
the Green Economy in South Africa” provided an
applications while the remaining categories were
(14%) and public sector institutions (4%).
opportunity for researchers in the public and private
more evenly distributed: Low Carbon Economy
sector to conduct policy and applied research which
(20%), Environmental and Natural Resource
would deepen understanding of green economy
Management (24%) and Innovation for the Green
policy and practice in South Africa.
Economy (21%).
The second Request for Proposals (RFP), entitled
The geographic spread for the second RFP shows the
Research and Policy Development to Advance the
following break-down:
5. Research Portfolio RFP
Green Economy in South Africa, was issued in the last quarter. Applicants were invited to apply in the existing thematic windows of the Green Fund
• 75% of all applications submitted, were from Gauteng and Western Cape provinces
(Green Cities and Towns, Low Carbon Economy, Environmental & Natural Resource Management) or
• 11% of applications were received from
to submit applications under a new thematic window,
Mpumalanga, Free State, Eastern Cape and
Innovation for the Green Economy, which examined
Northern Cape provinces and
innovative approaches (planning, technological, policy development) which advance green economy objectives.
• 7% of application were received from KwaZulu Natal and Limpopo submitted 11 applications (7%) each.
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Section C | Fund Manager’s Report | Operations Overview
Operations Overview (continued) Thematic Breakdown of Research Applications
Geographical Spread of Research Applications
Green Fund Portfolio Impact It is envisaged that the impact of the Green Fund will be seen in providing start-up or top-up funding for innovative and high-impact green programmes that supports the transitioning process to a greener economy. Most importantly, the lessons and feedback into policy and institutional arrangements will be where the Green Fund will have the greatest impact, creating an enabling environment for future investments.
The demonstration effect of Green Fund projects is also imperative, with projects providing examples of viable and sustainable opportunities for the private and public sectors to invest in. Project results will highlight lessons to inform future green programmes and attract additional resources through leveraging of additional resources locally, regionally and internationally.
The current project pipeline of proposals undergoing the various stages of investment and evaluation as
Green Fund | Annual Report | 2012 / 2013
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Section C | Fund Manager’s Report | Operations Overview
Operations Overview (continued) • Beneficiaries – who require regular feedback to aid
well as opportunities potentially emanating from
the management of the Fund. However, all audit
active origination, is showing a considerable portfolio
procedures are overseen by the DBSA Audit
decision-making and quality assurance as well as
of investments. The consolidated portfolio based
Committee.
support and guidance for their own M&E activities,
on the current pipeline of deals is expected to yield 2808 direct jobs in the areas of skills development
Seven Management Committee meetings were held
and training, tourism growth and development, local
during the financial year under review.
management.
information and analysis to enable them to make evidence-based recommendations on strategy and
economic, business and enterprise development and community participation in sustainable biodiversity
• Green Fund Mancom – who require sufficient
Green Fund Monitoring and Reporting
funding allocation decisions,
• DEA and National Treasury and any additional The key sectors highlighted in the project portfolio
Monitoring and reporting on Green Fund activities
financing partners – who require regular reports to
are alternative waste management and energy
is undertaken as per the M & E Framework, which
assess programme progress and to fulfill their own
generation technologies, biodiversity management,
is informed by the Green Fund Memorandum of
accountability obligations and
solar energy generation and sustainable food and
Agreement (MoA) and Operational Guidelines, the
agricultural production techniques.
three thematic windows and prioritised activities agreed at the Green Fund Management Committee
Green Fund Governance
• Public - to ensure transparency about the use of public finance.
(ManCom). Monitoring and reporting is undertaken at three
The Green Fund is administered according to the
The audience for the M&E reporting system is:
levels:
• Green Fund Managers – who require management
1. Green Fund Programmatic Level: to monitor and
corporate governance framework of the DBSA, with the exception of the Management Committee, which has a distinct mandate and terms of reference.
information to aid decision-making and quality
report on whether overall performance in terms of
The Management Committee directs and controls
assurance and to support knowledge management,
objectives has been achieved.
Green Fund | Annual Report | 2012 / 2013
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Section C | Fund Manager’s Report | Operations Overview
Operations Overview (continued) 2. Green Fund Portfolio Level: to monitor and report against the design of the windows and how did it contribute to successful implementation of the Fund? How did it assist with learning and sharing of knowledge?
3. Green Fund Beneficiary Level: monitor and report at a beneficiary level progress on project implementation.
Mr Olympus Manthata
Investment Manager Green Fund
Green Fund | Annual Report | 2012 / 2013
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Section D Annexures
30
Annexure 1 Annual Financial Statements For the year ended 31 March 2013
31
Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
General Information Country of Incorporation and Domicile
South Africa
Nature Of Business And Principal Activities
The Green Fund is a unique, newly established fund that seeks to support green initiatives to assist South Africa’s transition to
a low carbon, resource efficient and climate resilient development path delivering high impact economic, environmental and
social benefits, Green Fund is a partnership between Department of Environmental Affairs and Development Bank of Southern
Africa, Department of Environmental Affairs is the principal of the fund and Development Bank of Southern Africa is the
implementing agent of the fund.
Registered Office
Headway Hill
1258 Lever Road
Midrand, South Africa, 1685
Business Address
Headway Hill
1258 Lever Road
Midrand, South Africa, 1685
Postal Address
P. O. Box 1234
Halfway House
South Africa, 1685
Bankers
Standard Bank
Nedbank
Rand Merchant Bank
Auditors
SizweNtsalubaGobodo
Chartered Accountants (S.A.)
Registered Auditors
Green Fund | Annual Report | 2012 / 2013
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Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
Index The reports and statements set out below comprise the annual financial statements presented to the Department of Environmental Affairs:
Index
Page
DBSA’s Responsibilities and Approval
34
Independent Auditor’s Report
35
DBSA’s Report
37
Statement of Financial Position
38
Statement of Comprehensive Income
39
Statement of Changes in Funding Reserves
40
Statement of Cash Flows
41
Accounting Policies
42
Notes to the Annual Financial Statements
43
Green Fund | Annual Report | 2012 / 2013
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Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
DBSA’s Responsibilities and Approval The DBSA is required in terms of the Memorandum of Agreement to maintain adequate
risk cannot be fully eliminated, the Fund endeavors to minimise it by ensuring that
accounting records and is responsible for the content and integrity of the annual
appropriate infrastructure, controls, systems and ethical behaviour are applied and
financial statements and related financial information included in this report. It is our
managed within predetermined procedures and constraints.
responsibility to ensure that the annual financial statements fairly present the state of affairs of the Fund as at the end of the financial year and the results of its operations
The DBSA is of the opinion that the system of internal control provides reasonable
and cash flows for the period then ended, in conformity with International Financial
assurance that the financial records may be relied on for the preparation of the annual
Reporting Standards and in the manner required by the Memorandum of Agreement.
financial statements. However, any system of internal financial control can provide only
The external auditors are engaged to express an independent opinion on the financial
reasonable, and not absolute, assurance against material misstatement or loss.
statements.
The DBSA has reviewed the Fund’s cash flow forecast for the year to end 31 March 2014 and, in the light of this review and the current financial position, they are satisfied that
The annual financial statements are prepared in accordance with International Financial
the Fund has access to adequate resources to continue in operational existence for the
Reporting Standards and are based upon appropriate accounting policies consistently
foreseeable future.
applied and supported by reasonable and prudent judgments and estimates. The external auditors are responsible for independently reviewing on the Fund’s annual The DBSA acknowledges that we are ultimately responsible for the system of internal
financial statements. The annual financial statements have been examined by the Fund’s
financial control established by the Fund and place considerable importance on
external auditors and their report is presented on page 35 to 36.
maintaining a strong control environment. The DBSA sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The
The annual financial statements set out on pages 37 to 45, which have been prepared on
standards include the proper delegation of responsibilities within a clearly defined
the going concern basis, were approved on 25 July 2013, and were signed on its behalf
framework, effective accounting procedures and adequate segregation of duties to
by:
ensure an acceptable level of risk. These controls are monitored throughout the fund and all employees are required to maintain the highest ethical standards in ensuring the Fund’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Fund is on identifying, assessing,
M. Vilakazi
P.J. Moleketi
managing and monitoring all known forms of risk across the Fund. While operating
Chairperson: DBSA Audit Committee
Chairperson: DBSA Board
Green Fund | Annual Report | 2012 / 2013
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Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
Independent Auditor’s Report
To the National Treasury on the Green Fund
An audit involves performing procedures to obtain audit evidence about the amounts
We have audited the annual financial statements of Green Fund, as set out on pages 43
and disclosures in the annual financial statements. The procedures selected depend on
to 45, which comprise the statement of financial position as at 31 March 2013, and the
the auditors’ judgement, including the assessment of the risks of material misstatement
statement of comprehensive income, statement of changes in equity and statement of
of the annual financial statements, whether due to fraud or error. In making those
cash flows for the year then ended, and the notes, comprising a summary of significant
risk assessments, the auditor considers internal control relevant to the entity’s
accounting policies and other explanatory notes, as set out on page 42.
preparation and fair presentation of the annual financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
Management’s Responsibility for the Annual Financial Statements
of expressing an opinion on the effectiveness of the entity’s internal control. An audit
Management is responsible for the preparation and fair presentation of these annual
also includes evaluating the appropriateness of accounting policies used and the
financial statements in accordance with International Financial Reporting Standards,
reasonableness of accounting estimates made by management, as well as evaluating the
and in the manner required by the Memorandum of understanding. This responsibility
overall presentation of the annual financial statements.
includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of annual financial statements that are free from
We believe that the audit evidence we have obtained is sufficient and appropriate to
material misstatement, whether due to fraud or error; selecting and applying appropriate
provide a basis for our audit opinion.
accounting policies; and making accounting estimates that are reasonable in the circumstances.
Opinion In our opinion, the annual financial statements present fairly, in all material respects, the
Auditors’ Responsibility
financial position of Green Fund as at 31 March 2013, and its financial performance and its
Our responsibility is to express an opinion on these annual financial statements based
cash flows for the year then ended in accordance with International Financial Reporting
on our audit. We conducted our audit in accordance with International Standards on
Standards, and the requirements of the Memorandum of understanding.
Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the annual financial statements are free from material misstatement.
Green Fund | Annual Report | 2012 / 2013
35
Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
Independent Auditor’s Report (continued) Other reports As part of our audit of the financial statements for the year ended 31 March 2013, we have read the Management’s report for the purpose of identifying whether there are material inconsistencies between the report and the audited financial statements. The report is the responsibility of the preparers. Based on reading we have not identified material inconsistencies between the report and the audited financial statements. However, we have not audited the report and accordingly do not express an opinion on the report.
SizweNtsalubaGobodo Partner
Registered Auditors
25 July 2013
Green Fund | Annual Report | 2012 / 2013
36
Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
DBSA’s Report Management submits their report for the year ended 31 March 2013.
The operating results and state of affairs of the Green Fund are fully set out in the attached annual financial statements and do not in our opinion require any further comment.
1. Review of Activities Main business and operations
2. Going Concern
The Green Fund’s main business is to introduce and test a finance mechanism that will
The annual financial statements have been prepared on the basis of accounting policies
provide catalytic finance support to a variety of interventions (projects, research & policy
applicable to a going concern. This basis presumes that funds will be available to finance
development and capacity building initiatives) to inform the government’s vision of
future operations and that the realisation of assets and settlement of liabilities, contingent
transitioning to a green economy.
obligations and commitments will occur in the ordinary course of business. The ability of the Green Fund to continue as a going concern is dependent on a number
In April 2012, the Department of Environmental Affairs (DEA) made available R800 million
of factors. The most significant of these is that the Department of Environmental Affairs
over a three year period (2012-2015) for the establishment of the Green Fund. The transfer
continues to procure funding for the ongoing operations for the Green Fund.
of the initial R9, 36 million in May 2012 for operational costs started the establishment process of setting up a dedicated secretariat and investment team to administer the Green
3. Events After The Reporting Period
Fund operations
The Green Fund Management is not aware of any matter or circumstance arising since the end of the financial year.
An initial set of pipeline projects were submitted for approval in August 2012. In addition, a Public Request for Proposals (RFP) was widely advertised in September 2012 requesting
4. Management Agreement
project proposals in the thematic funding windows identified, resulting in submissions of
During the year the business of the Fund was managed by Development Bank of Southern
590 applications totaling an amount of R10,9 billion in request for funds against a budget
Africa (DBSA) under a Memorandum of Understanding between DBSA and Department of
of R800 million less operational costs of 10%. An evaluation process approved by the
Environmental Affairs.
Management Committee started in October 2012 in a two phased approach. A total of 32 RFP proposals were approved for due diligence. The total funding requested for all the
5. Auditors
projects under due diligence is R392 million. Phase 1 evaluations were completed by 21
SizweNtsalubaGobodo
February and 13 projects have been approved for funding. Total commitments for projects approved in the financial year amounted to R330 million of which R35.1 million has been
6. Comparative Figures
disbursed by 31 March 2013.
There are no comparative figures as the Green Fund started during the financial year ended 31 March 2013.
Green Fund | Annual Report | 2012 / 2013
37
Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
Statement of Financial Position as at 31 March 2013
Figures in Rand
Note(s)
2013
2
44,677,488
Funding surplus
3,622,993
Assets Current Assets Cash and cash equivalents Funding and Liabilities
Funds
Liabilities
Current Liabilities Deferred income
4
38,794,231
Account payable
3
2,260,264
41,054,495
Total Funds and Liabilities
44,677,488
Green Fund | Annual Report | 2012 / 2013
38
Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
Statement of Comprehensive Income
Figures in Rand
Note(s)
2013
Revenue Funds received recognised
4,5 & 8
35,109,851
Operational grants recognised
15,661,814
50,771,665
Disbursement Expenses Grants disbursed
5
Bank charges on disbursement account
(35,109,807) (44)
(35,109,851)
Operating Expenses Advertising
(1,423,269)
Bank charges
(4,969)
Consulting fees
(2,888,111)
Refreshments
(37,505)
IT expenses
(132,010)
Legal expenses
(469,463)
Management fees
(600,378)
Remuneration expenses
(5,298,719)
Printing and stationery
(26,352)
Recruitment costs
(428,787)
Cellphone costs
(10,635)
Rental costs
(247,072)
Subscriptions
(10,481)
Telephone costs
(16,163)
Travel and subsistence
(444,907) (12,038,821)
Surplus for the year
Green Fund | Annual Report | 2012 / 2013
3,622,993
39
Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
Statement of Changes in Funding Reserves
Figures in Rand
Funding Reserves
-
Balance at 01 April 2012 Surplus for the year
3,622,993
Balance at 31 March 2013
3,622,993
Green Fund | Annual Report | 2012 / 2013
40
Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
Statement of Cash Flows
Figures in Rand
Note(s)
2013
Cash flow from operating activities Cash receipts
88,773,744
Cash paid
(44,096,256)
Cash generated from operations
6
Net cash from operating activities
44,677,488 44,677,488
Total cash movement for the year
44,677,488 2
Total cash at end of the year
Green Fund | Annual Report | 2012 / 2013
41
44,677,488
Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
Accounting Policies 1. Presentation of Annual Financial Statements
Cash and Cash Equivalents
The annual financial statements have been prepared in accordance with International
Cash and cash equivalents comprise cash on hand and demand deposits, and other short
Financial Reporting Standards, and the Memorandum of understanding. The annual financial
term highly liquid investments that are readily convertible to a known amount of cash and
statements have been prepared on the historical cost basis, and incorporate the principal
are subject to an insignificant risk of changes in value. These are initially and subsequently
accounting policies set out below. They are presented in South African Rands.
recorded at fair value.
1.1 Basis of preparations
1.3 Grant received
The preparation of annual financial statements in conformity with IFRSs requires
Grants received for Grant Disbursement from Department of Environmental Affairs are
management to make judgements, estimates and assumptions that affect the application of
recognised to the extent that they have been expended; any unexpended funds received are
policies and reported amounts of assets and liabilities, income and expenses. The estimates
recognised as deferred income in the statement of financial position.
and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the
Funds received from Department of Environmental Affairs for operating cost are recorded as
basis of making the judgements about carrying values of assets and liabilities that are not
income when the funds has been received in the dedicated bank account.
readily apparent from other sources. Actual results may differ from these estimates. 1.4 Deferred income The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
Grants are recorded as deferred income when they become receivable and are then
accounting estimates are recognised in the period in which the estimate is revised if the
recognised as income on a systematic basis over the periods necessary to match the grants
revision affects only that period, or in the period of the revision and future periods if the
with the related costs which they are intended to compensate.
revision affects both current and future periods. The deferred income is recognised on the following bases: 1.2 Financial Instruments Account Receivable
It is the policy of Green Fund to account for the grants received for disbursement as
Trade and other receivables are classified as loans and receivables.
deferred income (Liability) and also recognise immediately the grants received for operational costs.
Account Payable Trade payables are initially measured at fair value and are subsequently measured at
It is the policy of Green Fund to account for the interest received from the call and current
amortised cost, using the effective interest rate method.
account as part of disbursement, meaning as deferred interest (Liability).
Green Fund | Annual Report | 2012 / 2013
42
Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
Notes to the Annual Financial Statements
Figures in Rand
2013
2. Cash and cash equivalents
Cash and cash equivalents consist of: Bank balances
74,009
Short term deposits
44,603,479
44,677,488
3. Account Payable Development Bank of Southern Africa
1,553,134
Leave accrual
254,535
Other payables
452,595
2,260,264
4. Deferred income Funds received from Department of Environmental Affairs
73,111,929
Less: Funds received recognised
(35,109,851)
Plus: Deferred interest
792,153
38,794,231
This relates to funds received from Department of Environmental Affairs on the 3rd January 2013 which will be utilised for grants disbursements in the future period.
Green Fund | Annual Report | 2012 / 2013
43
Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
Notes to the Annual Financial Statements
Figures in Rand
2013
5. Grants Grants : The Wildlands Conservation Trust
(24,767,494)
Grants : Durban University of Technology
(220,000)
Grants : South African National Parks
(187,950)
Grants : Ethekwini Municipality
(603,413)
Grants : The Council for Scientific and Industrial Research
(9,330,950)
(35,109,807)
6. Cash generated from operations Surplus for the year
3,622,993
Changes in working capital: Account payable
2,260,264
Deferred income
38,794,231
44,677,488
7. Taxation The Green Fund is exempt from income tax in terms of section 10(1) (yA) of the Income Tax Act (No. 58 of 1962)
8. Grant approvals and commitments Approvals
186,440,794
Commitments
144,363,799
330,804,593
The disbursement of such funds is subject to grantees agreeing to the terms and conditions of their contracts and their achieving agreed targets.
Green Fund | Annual Report | 2012 / 2013
44
Section D | Annexures | Annexure 1 Annual Financial Statements for the year ended 31 March 2013
Notes to the Annual Financial Statements
Figures in Rand
2013
8. Grant approvals and commitments (continued) Approvals relate to the total amount of funds that the Management Committee has decided to offer to successful applicants in respect of their proposed projects. The negotiations and legal contracts in respect of approved projects have not yet been finalised.
Commitments relate to the total amount of funds approved by the Management Committee for projects in respect of which legal contracts have been finalised. A commitment for each project is generally payable in tranches (draw downs) over the duration of the project as per its agreed implementation plan.
Green Fund | Annual Report | 2012 / 2013
45
Annexure 2 Green Fund Project Portfolio
46
Section D | Annexures | Annexure 2
Green Fund Project Portfolio No
Funding Window
Sub-Sector
Applicant
Project Name
Project Phase
Applicant Type
Mancom Record of Decision
Financial Instrument Applied for
Location
1
ENRM
Rural adaptation projects and plans
Durban University of Technology
Novel Rainwater Harvesting Technology
Pilot and Demonstration
Research organisation
Approved for funding
Non-recoverable grant
KwaZulu-Natal
2
ENRM
Payment for Ecosystem Services
eThekwini Municipality
eThekwini Municipality Reforestation Programme
Project Implementation
Municipality
Approved for funding
Non-recoverable grant
Gauteng
3
GCT
Other - ICT
CSIR Meraka Institute (Submitted by Department of Science & Technology)
Smarter Cities for a Greener Economy
Pilot and Demonstration
Research organisation
Approved for funding
Non-recoverable grant
Gauteng
4
ENRM
Sustainable land use management and models
SANPARKS
SANPARKS Rural Development Programme
Project Implementation
Other (Government Agency)
Approved for funding
Non-recoverable grant
Eastern Cape & Western Cape
5
GCT
Energy efficiency and demand side management
City of Tshwane
Energy Efficient Municipal Buildings
Project development phase (incl. feasibility studies)
Municipality
Approved for funding
Non-recoverable grant
Gauteng
6
GCT
Renewable energy, incl. off grid and mini grid
City of Cape Town
Micro Hydro Electrical Plant
Project development phase (incl. feasibility studies)
Municipality
Approved for funding
Recoverable grant
City of Cape
7
GCT
Sustainable waste management & recycling
Wildlands Conservation Trust
Wildlands Waste-Preneurs Project
Project Implementation
NGO
Approved for funding
Non-recoverable and recoverable grant
KwaZulu-Natal
8
GCT
Sustainable waste management & recycling
Department of Environment Affairs
Jobs in Waste for Youth
Project development phase (incl. feasibility studies)
Other (National Government)
Approved for funding
Non-recoverable grant
Gauteng
9
GCT
Energy efficiency and demand side management
City of Cape Town
Thermal Efficiency Low cost Housing
Project Implementation
Municipality
Approved for funding
Non-recoverable grant
Western Cape
10
LCE
Industrial cleaner production & consumption
Incabex Pty Ltd
BETONA Project
Project development phase (incl. feasibility studies)
Private company
Approved for funding
Concessional loan
Western Cape
11
GCT
Sustainable Waste Management and Recycling
Re-Ethical Environmental Engineering KZN (Pty) Limited
Organic Waste Treatment to Energy Project
Project development phase (incl. feasibility studies)
Private company
Approved for funding
Recoverable grant
KwaZulu-Natal
12
ENRM
Land use management and models
Wildlands Conservation Trust
Farming the Wild to promote Greening of Rural Economy
Feasibility - piloting
NGO
Approved for funding
Recoverable grant
KwaZulu-Natal
13
LCE
Waste Management and Beneficiation
Use-IT
Hammarsdale/ Mpumalanga Waste Beneficiation Centre
Expansion
NGO
Approved for funding
Recoverable grant
KwaZulu-Natal
14
GCT
Sustainable Waste Management
Overstrand Conservation Foundation
Overstrand Food Waste Beneficiation Project
Project development / pilot / trial
NGO
Approved for Due Diligence (DD)
Non-recoverable grant
Western Cape
Green Fund | Annual Report | 2012 / 2013
47
Section D | Annexures | Annexure 2
Green Fund Project Portfolio (continued) No
Funding Window
Sub-Sector
Applicant
Project Name
Project Phase
Applicant Type
Mancom Record of Decision
Financial Instrument Applied for
Location
15
GCT
Off-grid RE and Wastewater Management
Biogas Renewable Energies Africa
Riversdale Municipality Biogas Plant
Project Implementation
Private company
Approved for DD
Recoverable grant
Western Cape
16
GCT
Sustainable Waste Management and Recycling
Institute for Environmental Biotechnology (EBRU), Rhodes University
Valorisation of Sewage Effluent and Sludges
Project development phase (incl. feasibility studies)
Research organisation
Approved for DD
Non-recoverable grant
Eastern Cape
17
GCT
Sustainable human settlements
The Sustainability Institute
iShack: A Sustainable Energy Solution for Informal Settlement
Project Implementation
Research organisation
Approved for DD
Recoverable grant
Western Cape
18
LCE
Other
African Alternative Technologies (Pty) Ltd
Sustainable Integrated Decentralized Food and Biofuel Production System
Project development phase (incl. feasibility studies)
Private company
Approved for DD
Recoverable grant
Gauteng
19
LCE
Renewable Energy
The Giant Flag Trust
The Giant Flag
Project implementation
NGO
Approved for DD
Non-recoverable grant
Eastern Cape
20
LCE
Renewable Energy (Biogas and Waste management)
CSIR
Renewable Energy from Waste Water Treatment for Sustainable Rural Towns
Pilot and demonstration
Research organisation
Approved for DD
Non-recoverable grant
Gauteng
21
LCE
Biogas and Biofuels
Biodiesel Technologies cc
Organic and Plastic Material to Diesel Oil
Project Implementation
Private company
Approved for DD
Recoverable grant
Free State
22
LCE
Rural Renewable Energy
Cape Peninsula University of Technology
Photo Voltaic and Wind Energy ‘Ubuntu’ Micro Grid Island for Rural Communities
Project development and feasibility
Research organisation
Approved for DD
Non-recoverable grant
Western Cape
23
ENRM
PES
Trade and Industry Policy Strategies
Improving Water Quality through Innovative ecological Engineering: Hartebeespoort Catchment Pilot
Pilot and Demonstration
Research organisation
Approved for DD
Non-recoverable grant
Gauteng
24
ENRM
Biodiversity benefiting PES
Endangered Wildlife Trust
Operation Oxpecker – Sustainable Pest Control for South Africa’s Farmers
Pilot and Demonstration
NGO
Approved for DD
Non-recoverable grant
Gauteng
25
ENRM
Biodiversity Benefitting
Muthi Futhi– Pioneer Commercial Production of Indigenous Medicinal Plants
Edakeni Muthi Futhi Trust
Project Implementation
CBO
Approved for DD
Concessional loan
KwaZulu-Natal
26
LCE
Energy Efficiency
KevConbelt (Pty) Ltd
Commercialization of Kevlar Reinforced Conveyor
Pilot and Demonstration project
Private company
Approved for DD
Concessional loan
Mpumalanga
Funding Windows:
GCT: Green Cities and Towns
Green Fund | Annual Report | 2012 / 2013
LCE: Low Carbon Economy
48
ENRM: Environmental and Natural Resource Management
Annexure 3 Green Fund Appraisal Process
49
Section D | Annexures | Annexure 3
Green Fund Appraisal Process
Green Fund | Annual Report | 2012 / 2013
50
Managed and implemented by the Development Bank of Southern Africa
Green Fund Secretariat: +27 (0) 11 313 5237 / 3611 Email: enquiries@sagreenfund.org.za Website: www.sagreenfund.co.za 51