Over 1.2 million residents across four Mpumalanga municipalities stand to gain improved water and electricity services under a five-year utility reform initiative. A R7.3b ($400m) financial injection is heading to the province to repair broken water pipes, stabilise electricity networks and improve financial management across the local municipalities.

The African Development Bank (AfDB) approved the mega-loan to fund the Mpumalanga Municipal Utility Reform Programme (MURP).

The five-year pilot project, running from 2026 to 2031, is targeting Emalahleni, Lekwa, Govan Mbeki and the City of Mbombela.

This was announced by the bank in a statement on July 16.

Targeting water cuts and power losses

For years, residents, especially those across the coalbelt, have endured severe service disruptions, high electricity losses and recurring water cuts. Under this new programme, funding will be tied directly to measurable improvements such as:
• reducing water and electricity losses
• improving revenue collection
• repairing critical infrastructure
• strengthening utility management.

The MURP is expected to reduce greenhouse gas emissions, create jobs, improve municipal governance and strengthen climate resilience in coal-affected communities. As a pilot programme, it will also provide a model that can be expanded to other municipalities in South Africa and potentially to other countries facing similar challenges.

Alongside the local municipalities, the Inkomati-Usuthu Catchment Management Agency (IUCMA) will also receive support to safeguard regional river systems and water catchment areas.

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Treasury and DBSA lead project oversight

Unlike standard government grants, the programme is being implemented by the Development Bank of Southern Africa (DBSA) through a dedicated Programme Management Office, guided by National Treasury.

The National Treasury’s deputy director-general for intergovernmental relations, Ogalaletseng Gaarekwe, said the MURP is an important step towards improving and stabilising municipal services.

“It will test a support model that strengthens operations and maintenance, planning, infrastructure and municipal capability, helping to provide more reliable and sustainable water and energy services while advancing the government’s Just Energy Transition goals,” she said.

The vice-president for power, energy, climate and green growth at the AfDB, Kevin Kariuki, said this funding will strengthen local governance, which is fundamental to South Africa’s long-term development.

“By strengthening the financial sustainability of municipal utilities, this operation will improve electricity delivery, build more resilient local institutions and establish a replicable model for reforms that strengthen municipalities across South Africa,” said Kariuki.

While National Treasury and the DBSA will oversee the funds, local implementation will heavily rely on provincial governance.

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Provincial structures to monitor roll-out

Responding to inquiries about provincial oversight, Mpumalanga Department of Cooperative Governance, Human Settlement and Traditional Affairs’ spokesperson Freddy Ngobe clarified that the department will draw on Sections 154, 155(6), 137 and 139 of the Constitution, alongside Section 105 of the Municipal Systems Act, to monitor and support the municipalities throughout the roll-out.

“The main intention is to ensure that the capacity of municipalities is developed and strengthened so they can be able to run their own affairs. The AfDB funding will accelerate existing provincial interventions such as the Municipal Support and Intervention Plan and the Integrated Audit Support Plan by rapidly injecting much-needed technical skills, infrastructure and management systems,” he said.

Addressing concerns over potential council or political interference, Ngobe revealed that extensive prior consultations were conducted across provincial government structures, including the Executive Council, the Premier’s Coordinating Council, South African Local Governance Association and local mayors and councils.

“The programme shall be protected by all structures of the province,” Ngobe said, also noting that community engagement will be prioritised to ensure local buy-in.

Importantly for local taxpayers, he confirmed that residents and municipal ratepayer bases will not bear any financial burden to service the loan. The funds will reach the municipalities and the IUCMA as non-repayable grants, while National Treasury handles repayment out of national coffers and state revenue.

Additionally, Ngobe said the MURP will complement rather than conflict with existing debt-relief initiatives, such as the Eskom Debt Relief Programme. Rather than applying a single formula, interventions will be tailored to each municipality’s specific physical infrastructure gaps, providing targeted hardware and system upgrades alongside existing financial debt restructuring.