The African Development Bank (AfDB) has approved a ZAR 2.5 billion ($139 million) corporate loan to South Africa’s City of Johannesburg, marking the first time the bank has extended funding to a subnational government without a sovereign guarantee.
AfDB regional head for private sector operations in southern Africa Bleming Nekati
said on Friday that the decision, made in June, positions Johannesburg as a pioneer in market-based municipal financing, enabling the city to directly access capital for infrastructure upgrades without relying on national subsidies.
“The deal is more than just a funding breakthrough; it validates the growing view among investors and development professionals alike that, when well-managed, African cities can and should access capital markets on their own terms,” Nekati said.
The loan will support over 100 capital projects across electricity, water and sanitation, solid waste management and revenue-generating utilities.
Residents are expected to benefit from fewer power outages, improved water supply, enhanced waste collection and expanded industrial productivity.
The programme also includes 3,200 new household electricity connections, pipeline repairs, landfill upgrades and recycling expansion, all of which will be backed by tariff-linked repayment mechanisms.
The infrastructure rollout is projected to create 2,900 construction jobs and 592 permanent roles, with ZAR500 million worth of procurement contracts earmarked for youth-owned small-to-medium enterprises.
In addition, 160,000 low-income households will gain improved access to essential services.
Like many fast-growing African cities, the City of Johannesburg is under pressure, with legacy infrastructure fast aging.
Its electricity and water systems suffer significant losses at rates exceeding 30 and 46 percent, respectively.
Sanitation and waste services are overwhelmed, particularly in underserved communities.
Population growth is intensifying these challenges. Yet these constraints also represent opportunities: Johannesburg has unmet demand, real scale and, crucially, a clear willingness to reform.
The AfDB’s decision reflects growing confidence in Johannesburg’s financial governance following a decade of reforms that strengthened its credit profile.
The city’s economic output – estimated at $67 billion – surpasses that of many African nations, underscoring its viability as a direct investment partner.
This breakthrough is expected to catalyse similar moves by other African cities such as Dakar, Cape Town, Nairobi and Kigali, which are pursuing greater fiscal autonomy and accountability.
JN/APA