The African Development Bank (AfDB) Group has approved a R2.5 billion corporate loan to the City of Johannesburg Metropolitan Municipality, marking its first direct lending to a subnational entity in Africa.
This landmark transaction operationalizes AfDB’s Guidelines for Subnational Finance, aiming to finance critical infrastructure projects in electricity, water, sanitation, and solid waste management.
“This historic transaction demonstrates the African Development Bank’s commitment to supporting creditworthy cities as engines of economic growth,” said the African Development Bank’s Director General for Southern Africa, Kennedy Mbekeani.
“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 backbone, we’re investing in Africa’s urban future.”
The initiative is expected to benefit six million residents.
The loan will fund over 100 projects, including upgrading distribution networks, installing smart meters, expanding renewable energy capacity, and connecting 3,200 new households to the grid.
It will also rehabilitate aging pipelines, upgrade treatment facilities, and reduce water losses from 46% to 37%.
Furthermore, the funding will enhance landfill compliance, expand recycling facilities, and improve waste collection services.
This financial support will exclusively bolster revenue-generating trading services infrastructure, ensuring sustainable debt repayment while addressing pressing challenges in service delivery. Additionally, the AfDB seeks an additional $1.5 million grant through its Urban and Municipal Development Fund to support municipal reforms, governance enhancements, and climate-resilient planning initiatives.
Solomon Quaynor, Vice President for Private Sector, Infrastructure, and Industrialization at AfDB, emphasized the transformative impact of this initiative.
He highlighted that by directly financing Johannesburg, AfDB is pioneering a scalable model for subnational lending that facilitates comprehensive infrastructure development and positions the bank as a pivotal partner in fostering sustainable, inclusive urban growth across Africa.
“This landmark transaction signals a new era in how the African Development Bank can empower cities,” said Quaynor.
“By directly financing the City of Johannesburg, we are unlocking a scalable model for subnational lending that enables multi-sectoral infrastructure delivery and positions the Bank as a trusted partner in driving sustainable, inclusive urban development across Africa.”
The City of Johannesburg faces significant infrastructure deficits, including annual electricity losses of 30% over the past three years and water losses of 46.1%.
The project is anticipated to create 2,869 construction jobs and 592 full-time equivalent positions, with specific allocations of 14% for women and 23% for youth. Productivity gains are expected from reduced interruptions in electricity and water supply, benefiting 65% of industry electricity consumption and 5% of water usage.
Moreover, the initiative aims to enhance free basic services for 160,000 indigent households and allocate R500 million in contracts to small and medium-sized enterprises, with 40% reserved for women-owned businesses and 50% for youth entrepreneurs.
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