STATEMENT BY THE CITY’S EXECUTIVE MAYOR, PATRICIA DE LILLE
The following speech was delivered by the City’s Executive Mayor, Patricia de Lille, at the Johannesburg Stock Exchange Cape Town Office’s Green Bonds stakeholder dialogue today, 23 May 2017.
City of Cape Town Mayoral Committee Member for Finance, Councillor Johan van der Merwe; Director of Capital Markets in the Johannesburg Stock Exchange (JSE), Donna Nemer; City Finance officials; representatives from the JSE; investors and representatives from the banking sector; ladies and gentlemen.
Good morning, goeie môre, molweni, as-salaamu alaikum, shalom.
It is my pleasure to join you all this morning and to be among stakeholders such as yourself as we prepare to take our Green Bond to the market.
Cape Town is currently experiencing the harsh impacts of climate change, with our worst drought in 100 years.We have seen reduced annual average rainfall for the past two winters and abnormal weather patterns are set to continue with no sufficient rain predicted for the next three weeks.
While we are asking residents and businesses to reduce their consumption, we have to find innovative ways of bringing alternative water resources into our system.
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.
The capital costs of the emergency schemes are currently estimated at R315 million over three financial years.
In implementing these projects to address the drought and mitigate and adapt to climate change, we need to be innovative and diversify our financing mechanisms and these efforts will require partnership with the private sector.
The City of Cape Town as a member of the C40 Cities and the Global Covenant of Mayors has committed to the Paris Agreement of COP21 and it is imperative that we act on these commitments by implementing projects that will address climate change effectively.
We have to walk the talk if we are to truly deliver tangible climate action projects that not only protect our most vulnerable residents, but also ensure the sustainability of our city and especially our economy.
Last year I penned a piece along with the former Mayor of New York, Michael Bloomberg, where we said that over two-thirds of total investment in 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.
In Africa alone, there will be nearly 800 million more people living in cities than today.
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.
City governments often struggle to raise the funds they need for urban mobility projects like rail or bus rapid transit. There is a significant gap between the supply and demand for urban infrastructure.
Despite the challenges, the economic and environmental arguments for increasing our investments are crystal clear.
Investing in more compact, connected, efficient cities with world-class public transport systems can spur economic growth – ensuring returns for cities and investors, while also having positive side-effects for the well-being of residents and for the climate.
Sustainable cities also have healthier air, reduce the time wasted in traffic, and have lower greenhouse gas emissions.
We need to spend a little now to save a lot in the future. Devising ways to scale financing for infrastructure in cities and to shift capital flows to make sure new projects are sustainable is the next great challenge.
To do this, we need to empower cities financially and boost local resources for urban infrastructure.
The first step for cities is to improve access to private finance by improving creditworthiness.
The City of Cape Town has been a leader in managing public funds having received four consecutive clean audits and being the only metro to have received a clean audit in the last financial year.
We also have the highest possible credit rating for a South African municipality from Moody’s.
We are hopeful that the investor response to our green bond will be favourable, given our strong credit rating (National credit rating of Aaa.za) and our credibility in delivering meaningful initiatives to enhance the sustainability of our City.
These standards must be put to good use and this is where we start our journey to find more innovative and diverse financing models as we can no longer do things the way we used to do them and expect greater results.
We intend to issue our inaugural green bond to the value of R1 billion, which is part of the City’s own contributions to fund the City’s Climate Change Strategy.
For this bond, the City’s identified projects are in the process of being accredited through the Climate Bonds Initiative Standards.
All of the projects funded through the proceeds of the bond will thus carry certification of the Climate Bonds Initiative.
This will provide investors with the assurance that the bond is a true Green Bond.
In developing the associated Green Bond Framework, we have identified a suite of eligible projects for which the proceeds of the bond will contribute towards the overall funding thereof.
The projects to be funded by the green bond are a mix of adaptation and mitigation initiatives, all of which are aligned to the City’s Climate Change Strategy. The projects include:
· water management initiatives
· sewerage effluent treatment
· rehabilitation and protection of coastal structures
· purchase of electrical buses
· floodplain mitigation
In order to further ensure the viability of our Green Bond in the market, Moody’s will conduct a green bond assessment (GBA) and a credit rating which will add to the confidence levels in the investment programme.
The City has embarked on an Organisational Development and Transformation Plan where we are taking Cape Town to the next level by being more responsive, more proactive and positioning Cape Town as a forward-looking globally competitive business destination.
Our transformational priorities also include a focus on resource efficiency and dense transit-orientated development.
In a few weeks’ time, I will be leading a delegation as we embark on our Green Bond Roadshow in Cape Town and in Gauteng.
The roadshow is being arranged by Rand Merchant Bank and I look forward to engaging with you all in even greater detail in mid-June.
We are committed to this process as we understand the need to be innovative if we are to properly address the challenges of our time and protect our livelihoods and our planet for future generations.
In closing, I am pleased to see that the next item on today’s programme is ‘How and why investors are driving this market: what investors want to see’.
As a City we have seen that working with the private sector is an effective way of getting things done.
I am happy to hear that investors have realised how important it is to invest in climate aware or low-carbon projects.
For me it is important that Cape Town delivers on the projects that promote resource efficiency, allow the economy to grow, and protect residents from the harsh impacts of climate change.
The market can only work with investors and I join the call for more investors to become players in the green space.
Thank you, baie dankie, enkosi, shukran.