Ratings agency Moody’s Investor Services upgraded the City of Cape Town’s credit rating, following the metro’s placement on a ‘positive outlook’ in July 2024.
The agency noted that ‘good governance is enabling the City to fund major infrastructure investment’. Drawing specific reference to Cape Town’s infrastructure programme, the agency noted: ‘The city plans to diversify water sources and upgrade infrastructure.
Cape Town mayor Geordin Hill-Lewis noted that Cape Town will invest R23 billion in infrastructure over the next two years. These initiatives aim to address vulnerabilities that caused the previous rating downgrade.
“We expect its debt metrics to remain moderate compared to international peers. Cape Town’s strong financial management has led to a slow but steady improvement,” he said.
Cape Town will invest a South African-record R40 billion in infrastructure over three years, far more than any city and comparable to all of the Gauteng metros combined, the mayor stated.
Lower-income households will directly benefit from 75% of infrastructure spending. The city estimates these investments will create 130,000 construction-related jobs over three years, building on the metro’s current status of having SA’s lowest unemployment rate.
“Cape Town is already making vital multi-billion rand investments in better water, sanitation, electricity, roads and other infrastructure. Now this latest ratings upgrade will enable us to do even more for less by bringing down the costs of borrowing for ratepayers and strengthening the City’s ability to cost-effectively fund our record infrastructure investment,” the mayor said.
“Our city has long motivated for ratings agencies not to tar Cape Town with the same financial brush as other cities, where finances are collapsing. Cape Town is a standout investment partner and an example of good governance. This ratings upgrade now affirms Cape Town as the premier destination in our region for investment by global and local finance institutions,” said mayor Hill-Lewis.”
Infrastructure investment highlights over the next three years include:
- Over R6 billion in wastewater treatment works upgrades, over R2.5 billion in new water projects, and bulk sewer upgrades such as SA’s largest on the Cape Flats Bulk sewer, as well as the Phillipi, Milnerton and Helderberg ‘Trappies’ sewer lines.
- A further R4.5 billion for the major MyCiTi south-east expansion from Khayelitsha and Mitchells Plain to the southern suburbs
- R5 billion in electrical grid upgrades and maintenance to prepare for a dynamic, decentralised energy future
- R3.5bn in road maintenance, upgrades and congestion relief projects over three years
- R3.4 billion in informal settlement upgrades
The City’s 10-year infrastructure pipeline is valued at an estimated R120 billion, to be funded by a blended finance model leveraging the City’s own healthy balance sheet, as well as finance from local and international markets.
City Council has to date approved R3.5 billion in infrastructure finance from Nedbank, R2.8 billion towards major electricity grid upgrades from the German Development Bank, KfW, and developmental financing worth $150m from the International Finance Corporation (IFC), and €100 million from the Agence Francaise de Developpement (AFD).
