Cape Town — The City of Cape Town (CoCT) secured a lucrative R2.8 billion contract towards the development of major electricity upgrades, the city confirmed on Friday.
In a statement, the City revealed it agreed with the German Development Bank. KfW, on behalf of the German government as part of the city’s plan to transition to a dynamic decentralised energy future. KfW provides the city with favourable financial terms for long-term affordability.
Cape Town Mayor Geordin Hill-Lewis was happy with the plans to finance the city’s electricity grid and said it could not achieve its goals without reliable infrastructure.
“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, “Hill-Lewis said.
Deputy Mayor and MMC for Spatial Planning and Environment, Eddie Andrews, said the current 10-year infrastructure pipeline is valued at an estimated R120 billion and the loan, which is over 15 years, will help Cape Town invest sustainably in infrastructure for the future.
MMC for Energy, Xanthea Limberg, said the KfW’s support would boost infrastructure programmes and improve electricity services for both businesses and residents in Cape Town. The City is currently rolling out its three-year, R4 billion infrastructure programme to boost the grid and ensure it is harnessing new energy sources.
Cape Town secures R2,8 bn in finance for major electricity grid upgrades.
See: https://t.co/kZCv30MgwR#CTNews pic.twitter.com/AQSmXfZgPx
— City of Cape Town (@CityofCT) February 28, 2025
KfW CEO Stefan Winkels was proud to partner with Cape Town and said a stable and sustainable power supply was key for economic growth and social development.
The City is following a blended finance model, which includes funding from its own healthy balance sheet and finance from the local and international markets.
In 2024, the City Council approved an R3.5 billion loan for Nedbank and a R2.8 billion loan from the International Finance Corporation (IFC). In April 2023, the Council greenlit €100 million developmental financing from the Agence Francaise de Developpement (AFD).
According to BusinessTech, the Bureau for Economic Research recently pointed out that South Africa’s grid capacity constraints have effectively capped South Africa’s GDP growth, as any move to expand business operations or push for growth will be met with a power grid that cannot support it.
If South Africa pursues job and economic growth, loadshedding will return as there is not enough capacity to support it. Cape Town has followed the likes of Johannesburg and Tshwane by investing in infrastructure projects.
Cape Town already stands out from other metros in the country through its alternative energy sources, which allow it to reduce the stages of load shedding relative to the national schedules.
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Compiled by Matthew Petersen
