South Africa gets R16 billion loan to fix Johannesburg, Cape Town, and other cities

The New Development Bank (NDB) has approved a loan of up to $1 billion for South Africa to upgrade its urban infrastructure in eight metropolitan municipalities.

The New Development Bank is a multilateral development bank established by Brazil, Russia, India, China and South Africa (BRICS) in 2015.

It was launched to mobilise resources for infrastructure and sustainable development projects in emerging markets and developing countries (EMDCs).

“We leverage capital for development purposes to accelerate economic growth and to achieve environmental and social sustainability,” it said.

In a recent announcement, the NDB said it had approved a loan to support a programme in South Africa aimed at boosting investment in the provision of essential urban services.

These essential urban services include water supply and sanitation, electricity and solid waste management.

The municipalities expected to receive investments are Johannesburg, Cape Town, Buffalo City, Ekurhuleni, eThekwini, Mangaung, Nelson Mandela Bay, and Tshwane.

This loan comes amid the collapse of municipal infrastructure in South Africa’s largest metros, which is causing water outages, sewage spills, and rolling municipal blackouts.

Metros are incapable of generating the revenue required to sustain their operations, including infrastructure maintenance.

In Johannesburg, for example, there is a R200 billion infrastructure backlog in maintenance, which is unlikely to be addressed.

This problem is spiralling out of control, and several metros have consistently relied on unfunded budgets based on unrealistic revenue-collection assumptions.

Because of poor audit outcomes and weak collection ratios, metros like Tshwane and Johannesburg have also struggled to access capital markets or secure loans.

Their limited funds are increasingly consumed by operational costs rather than capital investment, which aggravates the infrastructure collapse.