Cape town: The government has secured a US$925 million loan from the World Bank as part of a larger US$3 billion initiative aimed at enhancing service delivery and upgrading aging infrastructure in South Africa’s metropolitan municipalities. The program targets eight metropolitan areas: Buffalo City, Cape Town, Ekurhuleni, Johannesburg, Tshwane, eThekwini, Mangaung, and Nelson Mandela Bay, which collectively house 22 million residents and contribute to 85% of the nation’s economic activity.
According to South African Government News Agency, the World Bank’s Board of Executive Directors has approved the South Africa Metro Trading Services Program (MTSP), marking the country’s first-ever Program-for-Results (PforR) operation. This initiative is designed to improve accountability, financial health, and operational performance of essential urban services in the country’s largest metropolitan municipalities.
Minister of Finance Enoch Godongwana stated that the six-year program, designed by the South African Government and supported by the World Bank, will aid in the turnaround of essential services and bolster city resilience. Metros will unlock incentive grant funding by demonstrating enhanced institutional and service delivery performance in water supply and sanitation, electricity, and solid waste management, thereby contributing to local capacity building using South Africa’s own institutions and processes.
Over the past decade, South African cities have encountered increasing challenges in delivering basic services, including declining access and reliability, financial instability, and underinvestment in infrastructure. The PforR financing instrument links disbursement of funds directly to the achievement of specific results, supporting government-led reforms and institutional strengthening in trading services such as water supply, sanitation, electricity, and solid waste management. These services are crucial for both residential and industrial users and are intended to be financially sustainable.
Cities that meet performance targets will gain access to broader funding to reinforce essential services. The government plans to utilize the loan to finance a new performance-based fiscal grant to the metros as part of the government’s Metro Trading Services reforms. The World Bank highlighted that metros will receive grants from the national government based on results achieved, incentivizing performance and promoting accountability to citizens.
World Bank Division Director for South Africa, Satu Kahkonen, noted that the Metro Services Trading Program signifies a milestone in South Africa’s partnership with the World Bank Group, demonstrating a shift toward results-driven financing to accelerate progress in public service delivery and governance. The operation aims to incentivize real performance improvements, accountability, and institutional reforms through a results-based approach, contributing to enhanced lives and livelihoods in South Africa.
Minister Godongwana underscored that the trading services reform represents a flagship government-wide reform under Operation Vulindlela Phase II, approved by the Cabinet in March 2025. Operation Vulindlela is a collaborative initiative of the Presidency and National Treasury to expedite structural reforms and support economic recovery. To champion the reform at a local level, the Minister met with mayors from each metro municipality in October.
The Program-for-Results model emphasizes “payment for good performance,” with the World Bank disbursing funds only when pre-agreed results, such as institutional reforms, improved collection rates, asset management practices, and service delivery benchmarks, are achieved and independently verified. This ensures a strong focus on outcomes, institutional change, and long-term sustainability.
The MTSP builds on the experience of National Treasury’s Cities Support Programme (CSP), established in 2011 and focused on enhancing performance and strengthening governance to achieve inclusive, urban economic growth. The CSP is implemented in the eight metros by the National Treasury of South Africa, supported by partners, including the World Bank.