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Waste management is emerging as a key sector for sustainable development in South Africa with opportunities for enhancing investments in carbon credits that target reduction of methane from landfills and moveable assets in relation to environmentally sound equipment required for effective waste management. In the past, the waste management sector was dominated by private sector with selective operations in what makes business sense through recycling of saleable products. Materials mostly recycled included paper and hard board, plastics, glass, tinplate and aluminum. The rest of the waste materials estimated at 10.2 million tons of both general and hazardous end up in landfills. This trend is now getting reversed as development agencies such as Deutsche Gesellschaft fu¨r Technische Zusammenarbeit Gmbh (GTZ), Danish International Development Agency (DANIDA), Danish Co-operation for Environment and Development (DANCED) and Development Bank of Southern Africa (DBSA) are identifying opportunities in the sector for sustainable development purposes. Two key areas for investments include capturing methane emissions from landfills for trading in carbon markets and financing both physical and moveable assets to enhance sustainable development. However, the challenges for cost-effectiveness, efficiency and sustainability in the sector prevail in relation to lack of sound knowledge to design and implement integrated programmes that incorporate environment, development and sustainability. Also, inadequate capacity at municipal levels to administer waste management programmes and inability to collect rates and taxes for effective management of landfills constraint effectiveness and efficiency of the sector. Overall, financial resources are imperative to waste management and sustainable development as the sector requires capital investments for necessary infrastructure.

This article outlines some of the latest developments and opportunities for development finance institutions 1 (DFIs) to become directly supportive of the Clean Development Mechanism (CDM 2 ) in Africa. In striving to make development financing more environmentally friendly and sustainable, DFIs can play a key role in promoting the CDM on the African continent by providing monetary incentives through their project financing activities; encouraging and facilitating partnerships in support of sustainable development, particularly with reference to the CDM, and; providing technical advice and support to clients with regard to project design, planning and implementation.DFIs have traditionally focused on financing infrastructure and poverty alleviation projects. However, the emergence of the CDM has brought about a shift towards investments in services and products that reduce carbon dioxide emissions and encourage investments in environmentally friendly technologies. This can be ascribed in part to the development of a ''carbon market'' under the auspices of the Kyoto Protocol that took effect in February 2005. The carbon market and emerging carbon funds are some of the main drivers enabling DFIs to play an increasingly important role in promoting the CDM in Africa.

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