The Development Bank of Southern Africa (DBSA) has announced the financing of a R3 billion loan to City of Johannesburg (COJ) and R1.5 billion to City of Tshwane (COT).
The DBSA said the metros and municipalities have a track record of good corporate governance and financial management, as reflected in both their internal credit rating, audit outcomes and repayment profile.
It said that the funding will be used to roll out large-scale infrastructure programmes, to accelerate service delivery to communities by addressing backlogs, particularly in townships, rehabilitate infrastructure and invest in growth supporting and revenue generating infrastructure.
These initiatives include the construction and upgrade of electrical, water, sanitation, refuse, road, storm water and human settlements infrastructure projects, addressing service delivery and ageing infrastructure in the respective metros, the lender said.
The loans will be repaid over a period of approximately 15 – 20 years.
“The DBSA is stepping in to plug market deficiencies as other infrastructure lenders and investors are pulling out of massive capital programmes due to market uncertainty. The funding will go a long a way in cushioning the blows and ensuring that municipalities are not interrupted in delivering much needed support to the people of South Africa,” said Tshepo Ntsimane, head of metros at the DBSA.
“Preliminary development impact analysis conducted by the DBSA team estimates that from these loans, at least 10,000 jobs will be created and about 1,700 youths will become part of the massive infrastructure development programmes in Gauteng,” he said.
“Earlier this month, we announced a R150 million Covid-19 response programme that is assisting seven provinces and 25 districts, bolstering government and private sector initiatives as they fight the pandemic,” said Mohan Vivekanandan group executive: Client Coverage at the DBSA.