South Africa secures R16.3bn loan to fix failing municipal services in eight major metros - IOL

The South African government has secured a $1 billion loan from the New Development Bank to support reforms aimed at improving the financial sustainability and performance of municipal services in the country’s metropolitan municipalities.

In a statement released to the media on Tuesday, National Treasury said the loan would support the government-led Metro Trading Services Reform Programme, which focuses on improving the governance, financial sustainability and operational performance of municipal services.

The programme covers key trading services including water and sanitation, electricity and energy, and solid waste management.

"The financing supports a government-led, performance-based reform programme implemented through South Africa’s existing legal, fiscal and institutional framework," Treasury said.

"This is a performance-based loan with financing linked to institutional strengthening and the achievement of independently verified measurable performance targets that are approved by metro Councils for their trading service."

Treasury added that NDB’s financing forms part of the government’s broader efforts to reform municipal trading services in metropolitan municipalities and offers favourable concessional financial terms.

Treasury said the financing would have a maturity period of 15 years, including a five-year grace period, with the interest rate linked to the Secured Overnight Financing Rate (SOFR).

The department said the concessional financing would help reduce the cost of funding the reforms while supporting metropolitan municipalities to strengthen the financial and operational performance of their trading services.

The programme applies to South Africa’s eight metropolitan municipalities: Buffalo City, Cape Town, Ekurhuleni, eThekwini, Johannesburg, Mangaung, Nelson Mandela Bay and Tshwane.

"The NDB loan was prepared in coordination with development partners active in South Africa's infrastructure sector. National Treasury extends its appreciation to the NDB for its support to this government-led reform towards better services for residents and stronger, more sustainable cities."