Government has secured a US$925m (approximately R15b) loan from the World Bank as part of a broader US$3b (R55b) initiative aimed at helping metropolitan municipalities improve service delivery and upgrade ageing infrastructure.

The programme will benefit the metropolitan municipalities (metros) of Buffalo City, Cape Town, Ekurhuleni, Johannesburg, Tshwane, eThekwini, Mangaung and Nelson Mandela Bay.

Together, these municipalities are home to 22 million people and account for 85% of South Africa’s economic activity.

Landmark metro programme approved

The World Bank’s board of executive directors has approved the South Africa Metro Trading Services Program (MTSP), the first-ever Program-for-Results (PforR) operation in the country.

This landmark programme aims to improve accountability, financial health and the operational performance of essential urban services in the country’s eight largest metropolitan municipalities.

Minister of Finance Enoch Godongwana said the six-year programme, designed by the government and backed by the World Bank, will support the turnaround of essential services and enhance the resilience of cities.

“Metros will unlock the incentive grant funding by demonstrating improved institutional and service delivery performance in water supply and sanitation, electricity and solid waste management.

“This will contribute to local capacity building, making use of South Africa’s own institutions and processes.”

Supporting performance and accountability

Over the past decade, South Africa’s cities have faced growing challenges in delivering basic services, with declining access and reliability, financial instability and underinvestment in infrastructure.

The PforR, a financing instrument that links disbursement of funds directly to the achievement of specific results, will support government-led reforms and institutional strengthening in trading services, namely water supply and sanitation, electricity and solid waste management.

These services are vital for both residential and industrial users and are intended to operate on a financially sustainable basis.

Cities that meet performance targets will unlock access to the broader funding to strengthen essential services.

The government will use the loan to fund a new performance-based fiscal grant to the metros, as part of its Metro Trading Services reforms.

“Metros will receive grants from the national government, based on results achieved. Should results not be achieved, the grants are not released. This approach incentivises performance and promotes accountability to citizens,” the World Bank said.

Partnership and reform

World Bank division director for South Africa Satu Kahkonen said: “The Metro Services Trading Programme represents a milestone in South Africa’s partnership with the World Bank Group, showcasing a shift toward results-driven financing to accelerate progress in public service delivery and governance.

“This operation is designed to incentivise real performance improvements, accountability and institutional reforms through a results-based approach, contributing to better lives and livelihoods in South Africa.”

Godongwana emphasised that the trading services reform is a flagship government-wide reform under Operation Vulindlela Phase II, which was approved by Cabinet in March.

Operation Vulindlela is a joint initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms and support economic recovery.

To ensure that the reform is championed at a local level, the minister met with mayors from each metro municipality in October.

Focus on long-term sustainability

The Program-for-Results model focuses on ‘payment for good performance’.

The World Bank only disburses funds 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), which was established in 2011 and is focused on improving 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 with the support of partners, including the World Bank.  – SAnews.gov.za

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