The loan targets energy-efficient, ecological, economical and sustainable urban wastewater management. It is provided in the framework of South African-German development cooperation with a view to supporting South Africa in mitigating the effects of climate change and contributing to more water resilience.
The loan will be used to co–finance the upgrading of some of the city’s 25 wastewater management facilities which currently serve the city’s approx. 4 million residents and is in line with the city’s ongoing focus on diversifying Cape Town’s future water mix.
The Executive Mayor of the City of Cape Town, H.W. Dan Plato said: “The taking up of debt is standard practice for any major city administration, and in this instance, necessary to spread the related costs over the lifetime of the wastewater projects to limit any undue burden on the ratepayer. All cost implications have been considered in terms of affordability in advance.
Cape Town is a growing city and it is important that we are able to sufficiently invest in infrastructure, the diversification of resources and the reliable provision of water services over the coming years as we build our resilience. We thank the German government and KfW for their confidence in the overall management and governance of the City.”
The loan which is provided in local currency and will be payable at a concessional rate over 15 years is a first of its kind with KfW directly collaborating with a South African municipality.
“Through the modernisation of its wastewater management facilities, Cape Town will be better equipped to face climate change and deal with scarce water resources induced by periods of drought”, said Dr. Günther Bräunig, Chief Executive Officer of KfW Group.
Investments in the refurbishment and expansion of the facilities will not only increase the availability of treated wastewater for reuse e.g. in the agricultural, industrial or tourist sectors. They will also significantly enhance energy efficiency in the treatment process.
Electricity use for wastewater treatment typically takes up one of the largest shares of a city’s overall energy consumption. Leveraging efficiency and addressing water quality will thus have substantial cost benefits. Furthermore, provisions will be made for the improved treatment of sewage sludge. The reduction of methane gas emissions will add to the positive climate change mitigation effects.
The German Ambassador to South Africa, Martin Schäfer, stressed that South Africa and Germany are close allies in combating climate change and implementing the Paris Agreement. He commended the people of the City of Cape Town and those of all Cape Provinces for their efforts to deal with the climate induced water crisis earlier this year.
“The Capetonians have demonstrated to the world that with concerted action it is possible to substantially reduce our water footprint and strengthen our resilience to climate change. This is leading by example,” Ambassador Schäfer said.