Grace Ashiru
South Africa has received approval for a loan of up to $1 billion from the New Development Bank to improve deteriorating infrastructure across its eight metropolitan municipalities.
The New Development Bank was established by the original BRICS members—Brazil, Russia, India, China and South Africa—to finance infrastructure and sustainable-development projects in emerging economies.
The new programme will channel funding into water supply, sanitation, electricity distribution and solid-waste management in Buffalo City, Cape Town, Ekurhuleni, eThekwini, Johannesburg, Mangaung, Nelson Mandela Bay and Tshwane.
These metropolitan areas contain a large proportion of South Africa’s population and account for more than two-thirds of its economic activity. However, ageing facilities, rapid urbanisation and years of inadequate maintenance have weakened the quality of essential services in several cities.
Water interruptions, electricity-distribution problems and unreliable waste services have increasingly affected households and businesses. The planned investment is expected to help municipalities replace damaged infrastructure, expand capacity and create a more reliable environment for economic activity.
The financing complements reforms introduced by South Africa’s National Treasury to strengthen the performance of municipal trading services. Those reforms are supported by R54 billion in performance-based grants and are intended to encourage cities to protect revenues collected from services and reinvest them in infrastructure.
The government hopes the measures can eventually attract as much as R100 billion in additional investment.
The latest loan also expands the New Development Bank’s activities in South Africa. The institution previously approved $200 million for the construction of a 488-bed academic hospital in Polokwane and another $205 million for the Magalies bulk-water project, which is intended to improve water access for about two million people.
Although the financing is frequently described as a “BRICS loan”, it is being provided by the New Development Bank rather than directly by the BRICS political grouping.
The programme is expected to contribute to South Africa’s National Development Plan 2030 by improving living conditions, strengthening municipalities and removing infrastructure problems that have constrained businesses and investment.
