Joburg applies for R750m IFC loan to fix ageing water systems

The City of Johannesburg has proposed a R750 million loan from the International Finance Corporation (IFC) to improve water infrastructure, particularly its ageing reservoir system. A public notice on the proposed loan was issued last week, with the city inviting residents to submit comments before 30 April.

Finance MMC Margaret Arnolds confirmed that the funds would form part of the city’s 2025/26 capital expenditure plan, with a 15-year repayment period. “We don’t want to go overboard and end up mismanaging funds meant for other needs,” she said.

Capital injection for long-term projects

Joburg’s capital budget for the 2025/26 financial year is R7.26 billion. Approximately 42.2%—just over R3.1 billion—will be funded through external loans. These funds are allocated for major infrastructure such as water and sanitation, electricity, roads, and housing.

Arnolds said the IFC loan would specifically support Johannesburg Water’s ongoing infrastructure upgrades. Recent developments include a R95 million investment into a new Erand Tower and Pump Station, aimed at improving supply in the Midrand area.

“This is just the beginning – it’s public participation first, then council,” she said. “The income generated by Joburg Water would be used to repay the loan.”

Recurring reliance on external funding

This would mark the third consecutive year the city has turned to long-term loans to finance infrastructure upgrades. In 2023, the city received R1 billion from the IFC. A year later, a R2.5 billion loan from the French Development Agency was approved—both with 15-year repayment plans.

Arnolds maintains that the city has been transparent about the loan process, adding that if the public opposes the proposal, the city will reassess its approach.

Concerns from opposition over transparency and spending priorities

However, DA shadow MMC for finance Chris Santana raised questions about the loan’s purpose and the city’s financial priorities.

“I just need to understand when they say ‘for capital expenditure’. I was told it would purely assist Johannesburg Water to fix the reservoirs,” said Santana. “We need to avoid constantly taking out loans for issues the city should already be addressing, like technical losses and improving revenue collection.”

He also highlighted the lack of clarity on the city’s indigent register and enforcement against illegal service connections. “The cost of living and services has outpaced residents’ ability to pay,” he added.

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Sourced:Sowetan Live