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South Africa targets development finance giants for funds to revive cities

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4th April 2025

By: Bloomberg

  

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South Africa, already counting on a $1-billion loan from the World Bank to regenerate its rundown cities, is seeking funding from some top global development-finance institutions to help with the revival.

The Brics nations’ New Development Bank, the Asian Infrastructure Investment Bank, Germany’s KfW and Agence Française de Développement have expressed interest in supporting the programme, the National Treasury said. Together the four institutions have about $768-billion in assets, dwarfing the $15-billion held by South Africa’s two main State-owned lenders, the Development Bank of Southern Africa and the Industrial Development Corp.

“Various development partners have been invited to participate” in the Metro Trading Services programme, the Treasury said in a response to queries. “Disbursements are dependent on municipalities meeting specific targets.”

The government is trying to stem the collapse of services in urban centers such as Johannesburg and Pretoria, with power and water outages regular occurrences alongside erratic waste collection.

The renewal programme, will focus on cities where 22-million people, or more than a third of the population, live across an area of almost 30 000 square kilometers. That’s almost 20 times the size of London.

The disbursements of grants to municipalities that run the eight main cities and hit certain targets in improving services and collecting revenue are due to begin this year.

The World Bank said that in addition to the $1-billion it has earmarked for the program, South Africa’s Treasury will provide $2-billion and municipalities are expected to add a further $6-billion from their own revenue and borrowing.

Part of the Treasury’s allocation is reflected in its latest budget.

“The new grant is intended to strengthen the management of, and infrastructure investment, in municipal entities that supply water and sanitation, electricity, energy and solid waste management services,” it said in the budget review. “The grant will be augmented by results-based financing from international development-finance partners.”

Edited by Bloomberg

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