South African financiers are preparing a R2 billion, about $122 million, bond to fund water conservation projects focused on restoring strategic water catchments.
The five-year bond, backed by Rand Merchant Bank and the Development Bank of Southern Africa, is intended to finance ecological restoration work. Planned activities include removing invasive plants and rehabilitating catchment areas to improve water security. The facility is structured as an outcome-based instrument that links 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, noted.
The initiative comes as South Africa faces pressure on public finances and increasing water challenges, prompting greater participation from private investors. Research by DBSA estimates that the country’s water sector will require R256bn in annual investment through 2050. The study also identifies a funding shortfall of R91bn annually.
Traditional bonds in the sector often focus on infrastructure projects such as dams and pipelines. This planned issuance instead targets nature-based approaches to improve the condition of water catchments.
Rand Merchant Bank confirmed its involvement in the project but said further details remain confidential.
If completed, the bond would form part of broader efforts to use debt markets to finance sustainable infrastructure projects while helping address South Africa’s growing water shortages.
