Anton Bredell, Western Cape Minister for Local Government, Environmental Affairs and Development Planning, alongside Deidre Baartman, Minister of Finance, applauded Rand Merchant Bank (RMB) for recently launching the Cape Water Nature-Linked Outcomes-Based Bond.
"In terms of the Western Cape’s Water Resilience Strategy, clearing of alien invasive plants is one of the most cost-effective ways to increase streamflow into our dams. This financial innovation ensures that current initiatives can scale up significantly, protecting the water supply for millions of residents and for our economy, including our vital agricultural sector," Minister Bredell said.
According to a statement issued by RMB, The Cape water performance-based bond is a R2.5 billion market signal that natural capital has entered mainstream finance in South Africa. It is the first capital-markets instrument issued by a commercial bank globally where investor outcomes are directly tied to verified ecological and environmental restoration outcomes.
Minister Baartman highlighted the fiscal importance of the transaction. "This issuance proves private capital is ready to back ecological infrastructure when the financial structuring is sound. By linking returns directly to verified conservation success, this model transfers execution risk away from traditional grant funders and the public purse. It ensures capital deployed demands a measurable, real-world result."
The transaction structure will support The Nature Conservancy (TNC) South Africa with implementing a conservation project to ecologically restore priority water catchment areas through the removal of invasive plants, thus increasing stream flow into storage dams.
"By focusing on the Boland Grootwinterhoek area, this initiative targets the water catchments that sustain the Greater Cape Town region’s economy," Minister Bredell said.
According to the RMB statement, the bulk of the funds for this conservation project have been raised through contributions from outcomes-based funders (OBFs) as part of the broader transaction structure. TNC South Africa is also bringing separate matching donor funding to support the project. The connection between the bond and the conservation project arises from the project outcome-based success payment mechanism, which links bond investors’ financial returns to the level of project success achieved.
"Water security remains a strict prerequisite for provincial economic growth," Minister Baartman added. "Our agricultural sector and the broader regional economy require reliable inputs to function. Utilising capital market instruments to secure these ecological resources demonstrates mature financial management. It supports long-term economic stability without placing undue pressure on the fiscus."
Beyond water security, both Minister Bredell and Minister Baartman applauded the project's focus on green job creation. The restoration work is expected to provide meaningful employment opportunities for rural communities, specifically targeting women and youth in the Western Cape.
Minister Bredell said that "the Cape Water Bond is a blueprint for how we can marry the needs of the environment with the requirements of capital markets."
“We hope this is the first of many such bonds that will help us build a climate-resilient province," Minister Baartman concluded.
Enquiries:
Spokesperson for Minister Anton Bredell
Wouter Kriel
Cell: 079 694 3085
Spokesperson for Minister Deidré Baartman
Marshallé Frederiks
Cell: 081 834 0792
E-mail: marshalle.frederiks@westerncape.gov.za
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