Inner City Investment Initiative, 2011 Public Sector Funding National Treasury, 23 September 2011

Source of infrastructure finance The primary sources of infrastructure finance available to municipalities are: internally generated funds and national transfers from government. However, these are insufficient to meet the scale of infrastructure investment required by municipalities. 2

Source of infrastructure finance, cont. There is thus a need for municipalities to explore ways of leveraging private finance to mobilise additional resources to fund infrastructure investments. 3

Source of infrastructure finance, cont. Four broad options exist: borrowing, development charges, land leases and PPPs. 4

Trend in the municipal borrowing market 5

Debt service profile 6

Development charges The municipal infrastructure required to support new property developments is typically very costly. There are essentially two approaches to financing it: –Municipal borrowing –Property developer 7

Land based financing strategies Municipal land sales Use municipal land as security Leaseholds on municipal land Land-use exchange 8

Public Private Partnership 9

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Thank you 11