SEOUL – The world’s biggest global climate fund has made its largest bid yet to encourage private investors to spend money on water projects in countries hit by climate change.

The US$235 million (S$312 million) Green Climate Fund (GCF) has contributed to a water reuse funding facility in South Africa is expected to help create a programme of almost US$1.5 billion. The Water Reuse Programme (WRP) will be run by the state-owned Development Bank of Southern Africa.

The project is “the first with this scale of finance for GCF in the water sector and as a single country water programme,” the Incheon, South Korea-based institution said in a response to queries on Wednesday. “The aim is to transform the water sector, with a focus on wastewater, from a predominantly public investment model to a private sector investment model.”

The investment highlights the increasing focus on water provision in increasingly arid countries such as South Africa, the fifth-driest nation in sub-Saharan Africa. While the country’s water infrastructure has been damaged by corruption and mismanagement, a series of unprecedented droughts have also brought Cape Town and Gqeberha, its second- and fifth-biggest cities, to the brink of running out of water. 

“WRP will support the structuring of blended finance options and the creation of a new asset class for a water-stressed country,” the GCF said, referencing the term used to describe investments using both public and private money. “South Africa is ranked among the countries most vulnerable to climate change.”

The facility will consist of subordinated and senior loans, grants, equity and guarantees, the GCF said. In all, US$1.4 billion will be available for financing projects, US$62 million will be used to support the programme and US$10 million will be spent on awareness and communication. BLOOMBERG