African Development Bank approves $139 million loan to Johannesburg
The African Development Bank approved a $139 million loan on Tuesday to Johannesburg, South Africa’s financial capital, to upgrade its utilities, marking its first direct lending to a sub-sovereign entity.
Johannesburg, home to Africa’s richest square mile, has seen certain areas fall into disrepair. The city has come under fire from President Cyril Ramaphosa as it prepares to host the G20 summit in November.
The loan will fund “100 carefully selected projects” aimed at modernizing electricity, water, and waste infrastructure, according to a statement from the Côte d’Ivoire-based bank.
This is the first time the bank, which primarily draws its resources from subscriptions by member countries, has loaned to a subnational entity.
“This historic transaction demonstrates the African Development Bank’s commitment to supporting creditworthy cities as engines of economic growth,” said Kennedy Mbekeani, the AfDB’s director general for Southern Africa.
Known as the city of gold or Jozi, Johannesburg faces numerous challenges, from burst water pipes to garbage piling up on street corners and cracked roads, a legacy of mismanagement.
Annual electricity losses have stood at 30 percent for the past three years, while water losses exceed 46 percent, according to the AfDB.
“Johannesburg is not just South Africa’s largest city; it contributes 16 percent 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,” Mbekeani added.
In March, Ramaphosa criticized the state of the city, home to six million people, describing it as “not very pleasing” and urging authorities to improve it ahead of the November meeting.
“As South Africans, we are proud people, and let us harness that pride to present a G20 that will wow the world,” he said.
The new Johannesburg loan adds to another loan from the AfDB to South Africa on the same day, aimed at promoting energy efficiency and rail reforms, worth over $474.6 million.
These loans come a week after the World Bank provided Africa’s most industrialized economy with $1.5 billion to revive its sluggish growth rate.
