The Asian Infrastructure Investment Bank (AIIB) has approved a USD500 million sovereign-backed loan to South Africa, to support the development of climate-resilient urban services.
The loan, which is the bank’s first investment in South Africa, will help improve the financial sustainability, governance and operational performance of municipal services, managed under the South Africa Metro Trading Services Program.
As the AIIB noted in a statement, it will support South Africa’s transition to ‘low-carbon, climate-resilient urban development’.
The project is being co-financed by the World Bank, as part of a broader $3 billion programme led by the South African government. This uses a performance-based financing approach to support reforms designed to improve governance, financial management and operational efficiency while incentivising investment in climate-related infrastructure.
‘More resilient cities’
“South Africa’s metropolitan municipalities are central to the country’s economic development and climate transition,” commented Rajat Misra, director general, Public Sector Clients Department (Region 1), AIIB.
“This investment marks the beginning of AIIB’s partnership with South Africa and reflects our shared commitment to building more resilient, sustainable and well-managed cities. By strengthening municipal governance and improving the performance of essential urban services, the Program will enhance infrastructure delivery while supporting South Africa’s climate and development objectives.”
South Africa’s eight metropolitan municipalities are home to around 22 million people, however many locations face mounting challenges due to ageing infrastructure, urban population growth and increasing climate-related risks.
The programme will seek to improve the delivery of essential public utilities, including reducing non-revenue water from 41% to 28% and cutting electricity losses from 22% to 12%, while strengthening the resilience of the municipal service network.
‘Long-term partnership’
“The AIIB financing strengthens the Government’s broader package of support to improve the governance, financial management and operational performance of trading services in metropolitan municipalities,” added Duncan Pieterse, director-general of South Africa’s National Treasury. “We welcome AIIB as a new development partner and look forward to building a long-term partnership that supports better services for residents and stronger, more sustainable cities.”
As AIIB noted, the investment aligns with the bank’s priorities in green infrastructure and sustainable cities, while also supporting its strategies covering water and sustainable energy. Read more here.
