The largest global climate fund on the planet has taken a significant step forward by investing $235 million in a funding facility that will support water reuse in South Africa. This program, with a value of nearly $1.5 billion aims to bring about a transformation in the water sector by moving away from public investment models and embracing private investment instead. This pioneering initiative seeks to tackle the pressing issues of water scarcity and vulnerability to climate change in a country that is considered one of the most at risk.
The largest global climate fund has made an astonishing bid to entice private investors into funding water projects in climate-affected nations. A sum $235 million contributed by the Green Climate Fund has been allocated to a water reuse funding facility in South Africa, with expectations of generating a staggering program worth nearly $1.5 billion.
Spearheaded by the state-owned Development Bank of Southern Africa, the Water Reuse Programme marks a watershed moment, emerging as the foremost initiative in the water sector that secures such immense financing from the GCF and centers on a single country.
This investment underscores the escalating emphasis on water supply in nations plagued by escalating aridity, notably South Africa, which ranks as the fifth-driest country in sub-Saharan Africa.
While corruption and mismanagement have battered the country’s water infrastructure, a sequence of unparalleled droughts has also pushed Cape Town and Gqeberha, its second and fifth-largest cities, close to the precipice of water scarcity.
The GCF, headquartered in Incheon, South Korea, affirms, “WRP will support the structuring of blended finance options and the creation of a new asset class for a water-stressed country.” This alludes to the utilization of both public and private funding in what is termed a blended finance approach. Notably, South Africa is positioned among the countries most susceptible to the ravages of climate change, thereby underscoring the urgency of this venture.
The funding facility is set to comprise a mix of subordinated and senior loans, grants, equity, and guarantees, thus broadening the financial landscape. A whopping $1.4 billion will be made available for project financing, with $62 million earmarked to support the program and an additional $10 million dedicated to awareness and communication initiatives.
