The International Finance Corporation (IFC) has announced a significant investment in the City of Cape Town Metropolitan Municipality’s infrastructure program, aimed at enhancing access to essential services for its residents, particularly low-income households, and driving inclusive economic growth through expanded and upgraded infrastructure.
The IFC is providing a ZAR 2.8 billion local currency senior loan (approximately US$150 million) to Cape Town, which will be used to upgrade and expand critical infrastructure, including electrical and transport systems, as well as water, sanitation, and wastewater management facilities. This loan, with an 18-year tenor, will enable the City to make sustainable investments in long-lasting infrastructure assets. The key focus areas include improving access to quality services for all communities and promoting greater spatial integration across the city. Notably, over 70 percent of the infrastructure investment will benefit low-income areas.
As South Africa experiences rapid urbanization, with urban populations projected to rise from 67 percent to 80 percent by 2050, Cape Town is on track to become the country’s most populous city. This urban growth is increasing pressure on municipalities already grappling with socioeconomic inequalities, climate-related challenges, and constraints on electricity supply from the national grid.
In response, Cape Town has developed a comprehensive 10-year infrastructure investment plan focused on rehabilitating, modernizing, and expanding urban infrastructure to ensure it meets future demands inclusively. This plan aims to significantly boost infrastructure spending to keep pace with the anticipated population growth.
The IFC’s investment builds on its ongoing partnership with the City of Cape Town. Under IFC’s cities initiative, supported by the State Secretariat for Economic Affairs (SECO) of Switzerland, the IFC has provided advisory services to help the City identify and implement solutions for improving energy services and mitigating climate change impacts.
Geordin Hill-Lewis, the Executive Mayor of Cape Town, expressed appreciation for IFC’s support, stating, “With its comprehensive financial products and advisory services, IFC has become a crucial partner for Cape Town. We are grateful for IFC’s willingness to extend the loan tenor to 18 years, allowing the City to better align the maturity of its liabilities with its long-term infrastructure assets.”
Cláudia Conceição, Regional Director for Southern Africa at IFC, added, “We are thrilled to collaborate with the City of Cape Town in enhancing water and sanitation services, wastewater treatment, road infrastructure, and power supply, which will bolster the City’s resilience. Our partnership aims to create a more favorable environment for residents and businesses by improving infrastructure quality and services.”
Including this latest investment, the IFC has provided nearly $400 million in debt financing and guarantees since 2004 to support various South African municipalities, including Cape Town, Johannesburg, Ekurhuleni, and Buffalo City.
