The City of Cape Town has secured R2,8 billion in development finance towards major electricity grid upgrades. The agreement with the German Development Bank, KfW, on behalf of the German Government, forms part of the metro’s planned transition to a dynamic, decentralised energy future.
Cape Town is set to spend R39,5 bn on infrastructure from July 2024 – June 2027 under the City’s ‘Building For Jobs’ Budget. This is South Africa’s largest ever three-year infrastructure investment by a metropolitan municipality, with the City investing over R4 bn in electricity grid upgrades and maintenance over this period.
The concessional nature of the KfW finance provides the City with favourable financial terms for long-term affordability.
‘We are pleased to secure this critical finance for our plans to upgrade Cape Town’s electricity grid. Without reliable infrastructure, we simply cannot achieve our goals to beat power outages, diversify supply, ensure reliable electricity for a growing city, and enable thousands of small-scale sellers to move electricity across our grid. That is why we’ve been on a mission to raise the ambition of our infrastructure investment agenda, which we estimate will create 130 000 construction-related jobs alone over three years. Lower-income households will also directly benefit from 75% – or R9 bn – of Cape Town’s R12 bn infrastructure spend in 2024/25,’ said Mayor Geordin Hill-Lewis.
‘The City’s 10-year infrastructure pipeline is valued at an estimated R120 bn, with the majority of projects linked to the metro’s overall Climate Change Strategy. The KfW’s concessional loan – over a period of 15 years – will help the City invest sustainably in infrastructure with long operational lifespans,’ said Alderman Eddie Andrews, Deputy Mayor and Mayoral Committee Member for Spatial Planning and Environment.
‘The City’s Energy Directorate is currently rolling out its three year R4 bn infrastructure programme to strengthen and expand our electricity grid and ensure it is capable of harnessing new energy sources, including renewables. The KfW’s support will boost our infrastructure programmes and significantly improve electricity services for both residents and businesses in Cape Town,’ said Alderman Xanthea Limberg, Mayoral Committee Member for Energy.
‘KfW is proud to support its longstanding partner, the City of Cape Town, in strengthening its environmentally friendly electricity infrastructure. Ensuring a stable and sustainable power supply is essential for economic growth and social development,’ said Stefan Wintels, CEO of KfW Banking Group.
‘We are delighted to see the partnership between South Africa and Germany further evolving. Climate change is one of the biggest global challenges of the 21st century. Germany’s support of South Africa’s Just Energy Transition underlines our commitment to stand beside our partner in challenging times,’ said German Ambassador Andreas Peschke.
The City is following a blended finance model, which includes funding from its own healthy balance sheet, as well as finance from the local and international markets. In June 2024, City Council approved R3,5 bn in finance from Nedbank, alongside R2,8bn from the International Finance Corporation (IFC). In April 2023, Council greenlit €100 million developmental financing from the Agence Francaise de Developpement (AFD).
