South Africa Lands a $1 Billion BRICS Bank Loan to Fix Its Cities

SOUTH AFRICA · ECONOMY

A new BRICS bank loan of up to $1 billion will help South Africa repair water, power and sanitation across the country’s eight largest cities. The New Development Bank, founded by the BRICS group, announced the financing on June 15, tying one of the bloc’s flagship institutions to the daily plumbing of South African urban life.

What the BRICS bank loan will pay for

The New Development Bank, the lender created by Brazil, Russia, India, China and South Africa, has signed off on up to $1 billion to modernise municipal services. The approval was announced on June 15, according to the bank.

The programme will channel money into water and sanitation systems, electricity distribution and solid-waste management. The bank says the goal is better living conditions and a friendlier setting for business.

It also frames the loan as support for South Africa’s National Development Plan 2030 and several United Nations Sustainable Development Goals. Those include sustainable cities, clean water and affordable energy.

Eight cities that carry the economy

The financing covers eight metropolitan municipalities: Buffalo City, Cape Town, Ekurhuleni, eThekwini, Johannesburg, Mangaung, Nelson Mandela Bay and Tshwane. Together they are home to about 22 million people.

That is close to 40% of South Africa’s population, concentrated in the hubs that generate most of its output. Many of those same cities have struggled with water shortages, ageing power lines and overstretched waste plants.

The new money is meant to ease those pressures while keeping essential services running. Better infrastructure, the bank argues, is also a precondition for private investment.

Reversing decades of underinvestment

South Africa’s problem is not new, and the numbers show it. Infrastructure spending slid from around 30% of GDP in the early 1980s to just 15% in 2022, according to official data.

That long decline has weighed on growth and left municipalities short of the capacity to deliver. Pipes, substations and treatment works have aged faster than they have been replaced.

The loan will sit alongside R54 billion, about $3 billion, in performance-based grants that the National Treasury announced in March. Those grants reward cities that reform how they manage and maintain their systems.

A Brazilian thread runs through the deal

For readers in Latin America, the most familiar face in this story sits at the top of the lender. The New Development Bank is led by Dilma Rousseff, the former president of Brazil, from its headquarters in Shanghai.

The bank was built by the BRICS countries as an alternative to the World Bank and the International Monetary Fund. It lends for infrastructure and development across member states and other emerging economies.

South Africa is one of three African shareholders, alongside Egypt and Algeria. Ethiopia, which joined the expanded BRICS bloc in January 2024, has applied to become a member as well.

Why a city loan speaks to a wider contest

A billion dollars for pipes and power lines can look modest next to the mega-deals that define the scramble for Africa. Yet the source of the money is the point.

The financing shows the BRICS bank reaching past summit communiqués and into the everyday machinery of an African state. It is the kind of practical lending that Western institutions have long dominated.

For South Africa, the calculation is straightforward: take development finance where the terms work, whoever is offering. For the bloc, each disbursement is a small, durable claim on influence.

What is at stake on the ground

The services on the list are the ones South Africans notice when they fail. Taps that run dry, substations that trip and refuse that goes uncollected are the daily texture of municipal decline.

South Africa has lived through years of rolling power cuts, and several metros have rationed water during dry spells. Repairing distribution networks and treatment works is meant to make those shocks rarer.

There is an economic edge to it as well. Investors weigh reliable power and water heavily, and cities that cannot guarantee them struggle to attract factories and offices.

Background: our brics guide.

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