An integrated financial framework for greening South African Metropolitan cities.
Makgopha, Sindisani Xavier
Makgopha, Sindisani Xavier
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Abstract
The long-term consequences of global climate change must be attended to timeously by cities (Nyamusamba, 2023:1) as they are responsible for minimising the impact of climate change on their citizens by greening their cities. However, this becomes a challenge as cities have asserted that they are willing to green their cities, but there is a lack of financial resources to execute green projects (Khan, Chowdhury & Techato, 2022:1,6; Buchner, Brown & Corfee-Morlot, 2011:5). Access to finance for green infrastructure is not only a South African problem (Omukuti, Barrett, White, Marchant & Averchenkova, 2021:497). The World Bank (WB) also confirmed that the global energy sector alone requires about $750 billion (R14.1 trillion according to exchange rates on 18 October 2023 at 19:06) per year to provide the renewable energy that the world requires (Kapoor & Robins, 2023:1; Baietti, Shlyakhtenko, La Rocca & Patel, 2012). The world has championed the mobilisation of green financing, yet the funding flows remain limited. According to the Department of Environmental Affairs (DEA), South African metropolitan cities have worked tirelessly since 2010 to attract investors to invest in their green projects, but with not much success (DEA, 2017:33). This study was designed firstly to develop a financial framework for the greening of South African metropolitan cities by addressing the critical problem of inadequate funding
frameworks. Secondly, the study aimed to describe and analyse the legislative and policy instruments to determine the conformity of South African metropolitan cities with relevant green laws and to support funding flows effectively. Thirdly, it evaluated the inadequacy of the existing financial models/structures in greening South African metropolitan cities. The study successfully achieved these objectives by providing a comprehensive analysis and practical recommendations. This study used a qualitative method approach. The units of observation were sustainability officials, climate change
officials, and environmental management officials from all eight metropolitan cities of South Africa. The units of analysis were the legislative and policy instruments, financial models/structures, and the existing practices in these cities. In each of the eight metropolitan cities, only one official (head of department) deals with the climate change or sustainable unit. The study targeted all these eight officials (whole population/census). The eight metros included Buffalo City, Cape Town, Ekurhuleni, eThekwini Johannesburg, Tshwane, Mangaung and Nelson Mandela Bay. However, only seven officials participated in virtual and telephone interviews to answer the interview questions. Content analysis was used to analyse data from municipal documents, books, journals and articles, while thematic analysis was employed to dissect data received from both the document analysis and the interviews. The climate change units within the municipalities experience challenges with institutionalisation, subordination, prioritisation and alignment of projects. Additionally, results obtained from municipal documents, books, journals and articles confirmed that the current financing models available are ineffective in greening South African metropolitan cities. The results obtained from the interviews showed that metropolitan cities lack financing to execute their green projects on a larger scale, which confirms the financial distress experienced globally, as reported by the WB. However, the findings revealed that financing is not the only challenge. This study outlined the non-effectiveness of the existing financial models/structures and some of the barriers they encounter when seeking green financing. Therefore, based on these findings, this study developed an integrated financial framework applicable to South African metropolitan cities by accelerating the greening of cities sustainably considering social, environmental, and economic factors. The findings provided the elements (funding, governance, policy alignment, community participation, monitoring, capacity building, and public-private partnerships as key elements) for the financial framework and mechanisms for its operation. The framework may encourage metropolitan cities to self-fund green projects and partner with the community and businesses, enabling municipalities to fund all sectors within their jurisdiction. The contribution of this study is the development of an integrated financial framework to guide practice and policy in significantly advancing the understanding of effective strategies for financing green initiatives in metropolitan
cities. The integrated financial framework developed (consisting of diversified funding sources, governance structures, policy alignment, stakeholder engagement, monitoring systems, and capacity-building initiatives) is a critical tool for metropolitan cities, providing practical applications for policymakers and practitioners in the quest for sustainable urban development.
Description
Submitted in partial fulfilment of the requirements for the Degree, Doctor of Business Studies: Finance
in the Department of Finance & Investment, Faculty of Economics and Finance Tshwane University of Technology
Date
2024-11-19
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Tshwane University of Technology
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Keywords
Carbon emissions, Eco-city, Financing structures, Green cities, Green financing, Greenhouse gases, Greening cities, Metropolitan cities, Project financing, Renewable energy, SDGs, South Africa cities, Sustainability