The African Development Bank approved a landmark $139 million loan to Johannesburg Tuesday, marking the institution’s first direct lending to a municipal entity as South Africa’s economic capital prepares to host Africa’s inaugural G20 summit in November.
The historic financing will fund 100 carefully selected infrastructure projects aimed at modernizing Johannesburg’s electrical, water, and waste treatment systems. Africa’s wealthiest city has experienced significant deterioration over four decades, with burst pipes, accumulated garbage, cracked roads, potholes, and malfunctioning traffic lights plaguing the metropolitan area of six million residents.
“This historic operation demonstrates the African Development Bank’s commitment to supporting creditworthy cities as engines of economic growth,” explained Kennedy Mbekeani, the Bank’s Director General for Southern Africa. Johannesburg contributes 16% to South Africa’s GDP and serves as the continent’s investment gateway.
The loan comes as South African President Cyril Ramaphosa had criticized Johannesburg’s “not very pleasant environment” in March, ahead of the November 22-23 G20 summit – the first to be held on African soil. The city’s infrastructure challenges have raised concerns about its readiness to host world leaders and international delegations.
Beyond the Johannesburg package, the African Development Bank also granted South Africa an additional $474.6 million loan for energy and rail infrastructure projects. These commitments follow the World Bank’s $1.5 billion loan to Africa’s most industrialized country last week, aimed at revitalizing economic growth.
South Africa faces significant challenges including electricity crisis and the world’s highest unemployment rate among G20 nations at 32%. The country of 62 million inhabitants has averaged just 0.7% annual growth over the past decade, highlighting the urgent need for infrastructure investment to stimulate economic recovery and job creation.