- Germany and France provide €300 million in concessional financing through KfW and AFD.
- Funding will support reforms across electricity, water, sanitation and waste services in South Africa’s eight metropolitan municipalities.
- Programme aims to improve municipal financial sustainability and unlock investment in ageing infrastructure.
South Africa’s National Treasury has secured €300 million in concessional financing, equivalent to R5.6 billion, from German and French development institutions to support reforms aimed at improving essential services across the country’s eight metropolitan municipalities.
The financing will support the Metro Trading Services Reform programme, which focusses on strengthening the financial and operational performance of municipal electricity, water supply and sanitation, and solid waste services.
The eight metropolitan municipalities collectively serve more than 22 million residents and are responsible for delivering essential services to households and businesses across some of South Africa’s most important economic centres.
Finance Minister Enoch Godongwana welcomed the financing from KfW Development Bank and Agence Française de Développement, saying it would strengthen government efforts to improve municipal governance, financial sustainability and operational performance.
The €300 million package comprises €200 million from KfW and €100 million from AFD. The financing forms part of Germany and France’s Just Energy Transition mandate and will contribute to the municipal component of South Africa’s Just Energy Transition Investment Plan.
The reform programme is intended to improve the financial performance of municipal trading services and ensure that revenue generated from these services can be reinvested into infrastructure.
National Treasury said the approach would help address infrastructure investment backlogs, reduce service interruptions and modernise electricity distribution networks.
The programme also recognises the role of financially sustainable metropolitan municipalities in supporting South Africa’s wider economic growth through improved service delivery and increased infrastructure investment.
AFD’s support builds on its long standing partnership with South African municipalities, including direct lending to Johannesburg, eThekwini and Cape Town. Its previous financing has supported municipal infrastructure while also addressing inequality and strengthening resilience to climate change.
KfW Country Director for South Africa Cornelia Tittmann said the programme demonstrated National Treasury’s leadership in developing reforms capable of improving service delivery and living conditions for millions of South Africans.
AFD Regional Director for Southern Africa Marie Hélène Loison said the programme would bring together the eight metropolitan municipalities and national government departments around a common reform agenda.
She said the initiative would help protect and sustain investment in essential urban services while delivering tangible improvements for residents and businesses.
The concessional financing comes as South Africa faces significant infrastructure backlogs across municipal electricity, water and waste services, with the performance and financial sustainability of metropolitan municipalities increasingly important to the country’s economic and energy transition objectives.
