Raising cash to go green

2017-06-13 06:02

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It will cost the City about R315m over three years to bankroll the emergency plans implemented to combat the drought and mitigate the affects of climate change.

But instead of turning to international banking institutions for this money, the City has opted take loans from local residents and businesses in the form of the “Green Bond”.

Just like any other bond, it will be a loan with you, the resident, serving as the bank. You loan your money to the City, and they promise to pay you back in full, with regular interest.

The only difference is that these bonds will be used exclusively to fund climate action projects in Cape Town.

Marian Nieuwoudt, who sits on the City’s assets and fascilities committee, applauds this project. “By offering these bonds, residents will have an opportunity to invest in the infrastructure of their own city,” she says. “The City will increase its investment potential instead of taking loans that will have to be paid back with taxpayers’ money.”

Niewoudt says this initiative will keep local money in Cape Town by means of investment value instead of paying back large amounts of interest to development banks. “Instead, residents will receive the interest payments,” she says.

Mayor Patricia de Lille made the announcement at the Johannesburg Stock Exchange’s Cape Town office on 23 May.

A delegation led by De Lille is set to embark on a Green Bond Roadshow, organised by Rand Merchant Bank, in Cape Town in the next week or two, to take the idea to the market and make more information available to the public.

During her speech at the time she gave a short overview of the City’s current drought relief emergency plans. “The City is currently accelerating emergency water schemes which include drilling boreholes into the Table Mountain Group Aquifer and a small-scale desalination package plant, located along Cape Town’s north-western coastline. In the event that there is another winter of below average rainfall, the City will be expanding and accelerating the abovementioned emergency schemes even further,” she said.

De Lille said the City inteds to issue their inaugural Green bond to the value of R1bn, for which several projects have been identified. They include water management initiatives, sewerage effluent treatment, rehabilitation and protection of coastal structures, purchase of electrical buses and floodplain mitigation.

De Lille said all the projects funded through through the proceeds of the bond will carry certification of the Climate Bonds Initiative to provide investors with the assurance that the bond is a true Green Bond. “And to further ensure the viability of our Green Bond in the market, Moody’s will conduct a green bond assessment and a credit rating which will add to the confidence levels in the investment programme,” she added.

De Lille predicts that over two-thrids of total investment infrastructure in the next 15 years will be made in cities.

“More people are living in cities than ever before and by 2050 around 70% of the global population will live in urban areas.

“To provide for all these new urban dwellers, we need more buildings, more bridges, more public transport, and more energy. Above all, we need investors to come to the table,” she said.

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