CAPE TOWN - South African financiers are preparing a ​2 billion ​rand ($122 million) bond to fund water conservation projects dedicated to restoring strategic water catchments.

Backed by Rand Merchant ⁠Bank (RMB) and the Development Bank of Southern Africa (DBSA), the five-year bond aims to finance ecological restoration, including removing invasive plants and rehabilitating catchment areas to enhance water security. ​The outcome-based facility ‌will link ⁠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.

The initiative reflects growing private-sector involvement as South Africa grapples with constrained public finances and significant water challenges. A DBSA study estimates investments totalling 256 billion rand annually are needed in the water sector through 2050, leaving a critical funding gap of 91 billion rand each year.

While traditional bonds target infrastructure like dams ‌and pipelines, this deal emphasizes nature-based solutions. RMB confirmed ⁠its involvement, saying details remain confidential.

If ​successful, the bond will align with broader efforts to tap debt markets for sustainable infrastructure funding, helping to address ​South Africa's ‌worsening water shortages.

($1 = 16.3292 rand)