The board of directors of the New Development Bank (NDB) has approved a loan of up to $1-billion for the development of water and sanitation infrastructure in South Africa under government’s Municipal Infrastructure Grant (MIG).

The MIG is a conditional grant allocated to municipalities to reduce infrastructure backlogs and ensure the provision of basic services to poor households.

The newest agreement follows hot on the heels of the signing of a R5-billion loan facility to Transnet.

The NDB was created in 2015 by Brazil, Russia, India, China and South Africa (Brics) to mobilise resources for infrastructure and development projects in Brics and other emerging market economies and developing countries.

In 2021, the NDB began expanding its membership and admitted Bangladesh, Egypt, the United Arab Emirates and Uruguay to its ranks.

Finance Minister Enoch Godongwana says he welcomes the funding commitments by the NDB to “critical freight logistics and water projects” in South Africa.

“They will go a long way in assisting us with the funding challenges faced by some of our programmes and parastatals. Every cent is welcome.”

Godongwana adds that government looks to the NDB to provide solutions aimed at derisking infrastructure projects for private capital.

“However,” he notes, “if the bank is to continue advancing the interests of the developing world and addressing challenges such as renewable energy, infrastructure development, digital access and job creation, then the NDB must make a concerted effort to speed up disbursements of approved projects.”

The R5-billion agreement with Transnet

was signed during the NDB’s ninth yearly meeting, held in Cape Town at the end of August.

Transnet’s freight rail sector renewal programme, which aims to restore freight rail volumes in South Africa, includes infrastructure renewal, locomotive overhaul and wagon fleet renewal workstreams.

The South African government will guarantee the loan.

“We need to fix the network,” Transnet CEO Michelle Phillips told Engineering News & Mining Weekly following the signing ceremony. “And we have a long way to go to do that.”

Phillips added that the network was in “a terrible state.

We have a lot to do to lift it to the standard where everyone can use it –us and private operators.”

“This loan underscores NDB’s commitment to supporting sustainable development and economic growth in South Africa,” noted NDB president Dilma Rousseff.

“By modernising the freight rail sector, we aim to facilitate more efficient logistics operations that will benefit the entire region and align with our goal of investing in a sustainable future.”