South Africa has secured a $1 billion loan from the World Bank to support a $3 billion national initiative aimed at reversing the decline in essential urban services across eight of its largest metropolitan areas.
The loan will serve as the anchor for the newly launched Metro Services Trading Program, which seeks to restore infrastructure, enhance service delivery, and incentivize performance-based reforms in municipalities.
Under the program, the World Bank loan will be complemented by $2 billion in government funding, bringing the total initial package to $3 billion.
The government will also leverage additional municipal revenues and borrowing capacity to scale the broader infrastructure recovery effort to $9 billion.
Cities targeted in the reform plan include Johannesburg, Cape Town, Durban, Pretoria, Bloemfontein, Gqeberha, East London, and Ekurhuleni—urban centers that collectively house over 22 million residents, or more than a third of the national population.
The World Bank emphasized the urgency of addressing service delivery challenges in these cities, citing recurring water shortages, power disruptions, and solid waste management failures.
“This is a new, targeted performance-based fiscal transfer that will support reforms in the trading services municipalities provide—such as water, electricity, sanitation, and solid waste,” the World Bank stated in response to inquiries. “Urgent action is needed to reverse the collapse of urban services.”
The program is designed to introduce conditional financial incentives for municipalities that meet specific benchmarks in service delivery.
The model represents a shift from traditional grants to performance-linked funding, aimed at driving accountability and ensuring measurable results in infrastructure upgrades.
South Africa’s National Treasury has yet to issue a detailed statement on the program’s operational framework, though the initiative was briefly referenced in the country’s recent budget proposal.
Treasury officials have confirmed that the structure will include reforms to existing grant systems and performance tracking across key sectors.
The World Bank notes that while municipalities already collect an estimated $6 billion in revenue annually, systemic inefficiencies and weak governance have eroded public trust and service quality.
The Metro Services Trading Program seeks to close this gap by reinforcing financial discipline and improving revenue collection.
The initiative arrives at a time of mounting public pressure on the government following widespread service failures and infrastructure decay.
The African National Congress (ANC), which has ruled since 1994, suffered a major electoral setback last year, losing its national majority for the first time—a development largely attributed to frustrations over poor service delivery.
Urban economists and policy analysts view the World Bank-backed plan as a critical opportunity to address long-standing dysfunction in city management.
However, they caution that without robust monitoring mechanisms and political will, the program’s impact could be limited.
In addition to improving services, the reform is expected to reduce municipal losses in water and electricity, bolster cost recovery efforts, and create a pathway for sustainable urban growth.
The World Bank reiterated its commitment to supporting South Africa’s reform efforts, stating that “well-functioning cities are essential to national development, job creation, and poverty reduction.”
