Infrastructure development: strengthening essential services
The first priority of the newly-elected government in 1994 was to fill the gap in terms of basic infrastructure and thus immediately promote economic and social catch-up for populations which had been victims of apartheid. Between 1994 and 2007, AFD committed 291 million euros to increase access for these populations to essential services: water, sanitation, education and, 160 million euros for social housing.
AFD has been supporting municipal investment programs since its establishment in South Africa through banking intermediation and direct financing. Between 1994 and 2004 eight credit lines were allocated to South Africa’s two main banks specialized in municipality financing: five to the public development bank, Development Bank of Southern Africa (DBSA), and three to the private financial institution, Infrastructure Finance Corporation Ltd (INCA). In 2005 and 2007 two consecutive financings were allocated to Johannesburg Municipality to finance drinking water supply in Soweto Township.
In 2005 a joint evaluation of the first four credit lines allocated by AFD to DBSA emphasized the considerable input of both institutions in addition to the huge efforts made by the South African Government: over one and a half million people were connected to electricity, over 800 000 people were connected to water supply and 400 000 gained access to primary healthcare infrastructure thanks to DBSA financing.
Moreover AFD, to support the South African Government’s social housing policy, has built up a partnership with South Africa’s main commercial banks in order to improve housing for low-income households and give them better access to homeownership. AFD, through four concessional credit lines allocated between 2005 and 2007 to South Africa’s main commercial banks, widened the target beneficiary base for home loans to households with monthly income between 3 500 and 7 500 rand (350-750 euros) and financed training programs for borrowers, real estate agents and public sector agents. Operations currently underway aim to provide access to housing for 10 000 households.
