South African financiers are arranging a 2 billion rand ($122 million) bond aimed at funding water conservation projects focused on restoring critical water catchment areas.
According to Reuters, the five-year bond is backed by Rand Merchant Bank and the Development Bank of Southern Africa.
It is designed to support ecological restoration efforts, including clearing invasive plant species and rehabilitating catchment zones to strengthen water security. The outcome-based structure will tie investor returns to measurable environmental improvements.
“The facility will support conservation of water catchments to ensure the health of these areas,” Mookho Mathaba, climate finance specialist at DBSA, told Reuters.
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The initiative highlights increasing private-sector participation as South Africa faces tight public finances and mounting water challenges.
A DBSA study estimates that the country will require 256 billion rand in annual investment in the water sector through 2050, leaving an estimated funding shortfall of 91 billion rand each year.
Unlike conventional bonds that typically finance physical infrastructure such as dams and pipelines, this transaction focuses on nature-based solutions. RMB confirmed its role in the deal but said further details remain confidential.
If successful, the bond would support broader efforts to access debt markets for sustainable infrastructure financing and help tackle South Africa’s growing water shortages.
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Image Credit: Reuters
