South Africa Water Re-Use Programme
South Africa is projecting a 17% water deficit by 2030, which is likely to be worsened by the impact of climate change. Our country needs to reduce its demand for water while increasing supply.
Water reuse has been identified as a key measure for increasing supply. The DBSA has recognised investment opportunities in supporting municipalities to identify and scale up their water reuse projects. At the same time, the DBSA conceptualised a blended finance solution that may be used to implement water reuse projects at scale – ultimately establishing water reuse as a new asset class in South Africa. Within this proposed blended finance solution there is scope for concessional funding from the Green Climate Fund (GCF) to ensure that individual projects are bankable, viable and sustainable.
The project will be implemented across the length and breadth of the country covering municipalities such as Nelson Mandela Metropolitan Municipality, Mangaung Metropolitan Municipality, Drakenstein Local Municipality, uMhlathuze Municipality, Sol Plaatje Local Municipality and all the large metros in the country.
The DBSA received project preparation funding from the GCF to prepare a comprehensive proposal and committed itself to the project’s preparation and design stage.
| Project | Value |
| Water Reuse Programme Design (Project Preparation) | USD515 411 (Approved by GCF) |
| Water Reuse Programme (Full Implementation) | USD1.4 billion (USD250 million to be requested from GCF for approval) |
| Total | USD1.9 billion |
The Department of Water and Sanitation (DWS) is proposing a suite of interventions through the National Water Resource Strategy (NWRS) and the 2018 National Water and Sanitation Masterplan (NWSMP). These interventions include decreasing water demand and water losses through non-revenue water, as well as other interventions to supplement the water supply mix. The DBSA’s funding recommends allocating USD330 million of catalytic capital to support the establishment of a national Water Reuse Programme (WRP) and enable the scaling-up of local pipeline water reuse projects.
Broadly, GCF funding will allow for a number of key enablers to be realised by:
- establishing a programmatic approach to the development and implementation of water reuse infrastructure by supporting municipalities to identify, prepare and structure bankable water reuse projects;
- enhancing access to more affordable finance by using GCF funding to reduce the cost of borrowing on a project level, with these lower financing costs (and potentially longer tenors) helping facilitate tariffs that are more attractive and affordable to end-customers, thereby enhancing project bankability; and
- enhancing access to private capital by blending the GCF funding with private investor funding, thereby enabling private funders and municipalities to lower their risk exposure on a project-by-project basis.
Increased participation from the private sector in this newly created asset class would, over time, allow for private sector support to be sustainable without continued GCF participation. However, GCF funding is critical to initially mobilise the programme and create the new asset class for future participation by the private sector. GCF funding of about USD1.5 billion will therefore be catalytic in establishing South Africa’s Water Reuse Programme
USD515 411 (Approved by GCF)
USD1.4 billion (USD250 million to be requested from GCF for approval)
- Technical and needs assessment
- Climate impact assessment
- Design of financial architecture and financial structure/ solution
- Communication and education assessment – social acceptance
- Programme operational guidelines including eligibility criteria
- Programme Management Office guidelines
- Gender action plan
- Environmental and social management framework