Natalie Nyathi
The African Development Bank (AfDB) has approved a significant loan of R2.5 billion (approximately $139 million) to the City of Johannesburg. This funding marks a historic moment as it is the first direct lending to a subnational entity in Africa. The loan is aimed at modernizing the city’s infrastructure and preparing it to host the first G20 summit on the continent in November.
This loan will finance critical projects in essential areas such as electricity, water, sanitation, and solid waste management. These improvements are expected to directly benefit over six million residents of Johannesburg, South Africa’s economic hub. “This landmark transaction… signals a new era in how the African Development Bank can empower cities,” said Solomon Quaynor, the Bank’s Vice President for Private Sector, Infrastructure & Industrialization. The AfDB aims to support sustainable urban development by investing in cities that can generate revenue through their services.
The loan will support over 100 carefully selected projects, including upgrading electricity distribution networks and installing smart meters, expanding renewable energy capacity, and connecting 3,200 new households to the power grid. Additionally, it will rehabilitate aging water pipelines and upgrade treatment facilities to reduce water losses from 46% to 37%. Improvements in waste management systems will also be prioritized, including expanding recycling facilities and enhancing waste collection services.
Kennedy Mbekeani, the AfDB’s Director General for Southern Africa, emphasized the importance of Johannesburg, stating, “Johannesburg is not just South Africa’s largest city – it contributes 16% to the country’s GDP and serves as a gateway for investment across the continent.” By strengthening its infrastructure, the AfDB is investing in the future of urban life in Africa.
The City of Johannesburg has faced various infrastructure challenges, including significant electricity and water losses. Over the past three years, the city has seen annual electricity losses of 30% and high water losses that have affected service delivery. The modernization projects funded by this loan are expected to create around 2,869 jobs during construction and significantly improve the reliability of services for residents.
In addition to the loan, the AfDB is also seeking a $1.5 million grant to support municipal reforms and climate-resilient planning initiatives. The benefits of the project extend beyond infrastructure improvements, as it will create 592 full-time equivalent jobs, with 14% reserved for women and 23% for youth. Reduced interruptions in electricity and water supply will enhance productivity for industries, while the project will provide free basic services to 160,000 low-income households. There are plans for R500 million in contracts for small and medium enterprises, with 40% reserved for women-owned businesses and 50% for youth entrepreneurs.
The AfDB has put in place comprehensive safeguards to ensure effective monitoring, transparency, and sound financial management throughout the lifecycle of the loan. This investment in Johannesburg’s infrastructure not only aims to improve the city’s services but also seeks to lay a foundation for sustainable economic growth in the region.