German President Frank-Walter Steinmeier used his state visit to South Africa productively, and Cape Town seems to have benefited most from the strengthening of ties between the two countries.

Steinmeier met with Cape Town Mayor Dan Plato and Western Cape Premier Helen Zille on Tuesday, where the two parties signed off on a deal that would pump R1.3 billion into the provincial economy.

Terms and conditions of the Cape Town, Germany loan

The money pledged from German officials is actually a loan, that will be paid back over the next 15 years at a rate of just over 8.1%. It’s believed that all 25 water treatment plants in Cape Town – including Zandvliet and Gordon’s Bay – will be the beneficiaries.

The @CityofCT and KfW bank sign loan worth R1,3 billion for wastewater treatment plant upgrades. A resilient Cape Town is one that is even more attractive to investors. #InvestCapeTown #Capeconfidence #Steinmeier #WaterWiseTourism #Nowherebetter #ResilientCapeTown pic.twitter.com/SsKHPxsThK — Wesgro – Cape Town & the Western Cape (@Wesgro) November 20, 2018

Where the money will go

This loan will strictly be used to improve the water infrastructure that serves the Cape. After narrowly avoiding a day zero scenario last year, the Mother City is keen to avoid history repeating itself. A hot, dry summer is forecast for the next few months and dam levels have already started dropping.

Plato made it clear to observers that this was an investment with sustainability in mind. The money, he says, will strictly be used to combat the threat of drought.

“Cape Town is a growing city and it is important that we are able to sufficiently invest in infrastructure, the diversification of resources and the reliable provision of water services over the coming years as we build our resilience.”

The announcement comes ahead of a busy 2019 schedule for water officials in the Cape, who recently confirmed that Arnold Schwarzenegger would lead a W12 water summit in Stellenbosch next year. Cape Town is one of 12 major cities seriously affected by climate change and water scarcity.