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 South Africa — aimed at strengthening the accountability, financial sustainability, and operational performance of essential urban services in the country’s eight largest metropolitan municipalities.
The $925 million (about R17 billion) program forms part of a broader $3bn (R55bn) national initiative designed to overhaul municipal trading services, which include water supply and sanitation, electricity, and solid waste management.
These services are critical to both households and businesses, yet have suffered from underinvestment, poor maintenance, and declining reliability in recent years.
As the country’s urban centres continue to grow, the MTSP marks a crucial step in restoring reliable municipal services and ensuring that cities remain engines of development and opportunity for millions of South Africans.
The immediate reform objective of the MTSP is to turnaround the decline in service reliability and quality through the turnaround in the performance of the institutions providing the service, leading to improved cash revenues, increased maintenance and investment, improved efficiencies, and enhanced services.
The beneficiary metros — Buffalo City, Cape Town, Ekurhuleni, Johannesburg, Tshwane, eThekwini, Mangaung, and Nelson Mandela Bay — together account for 22 million residents and 85% of South Africa’s economic activity, making the program pivotal to the country’s growth and service delivery agenda.
Unlike traditional loans, the PforR financing model links disbursement of funds directly to verified achievement of measurable results.
Cities will receive grants from the national government only when they meet specific performance targets such as improved revenue collection, institutional reforms, and enhanced service delivery standards.
Satu Kahkonen, World Bank country director for South Africa, said the Metro Services Trading Program 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 incentivize real performance improvements, accountability, and institutional reforms through a results-based approach, contributing to better lives and livelihoods in South Africa,” Kahkonen said.
The funds will be channelled through a new performance-based fiscal grant, supporting the government’s Metro Trading Services reforms. If targets are not met, grants will not be released — a mechanism that ensures greater accountability and transparency in municipal governance.
Finance Minister Enoch Godongwana described the MTSP as a flagship reform under Operation Vulindlela Phase II, approved by Cabinet in March 2025. He said the initiative will help rebuild confidence in the ability of metros to deliver core services sustainably.
“This six-year program designed by the Government of South Africa and backed by the World Bank will support the turnaround of essential services and enhance the resilience of our cities,” Godongwana said.
“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.”
To ensure strong local ownership, Godongwana met with mayors from all eight metros in October to align on implementation strategies and performance expectations.
The MTSP builds on lessons from the National Treasury’s Cities Support Programme (CSP), established in 2011 with support from partners including the World Bank. The CSP focuses on strengthening governance and improving performance to drive inclusive urban economic growth.
By linking funding to performance and verified results, the new program represents a shift toward outcomes-based governance, aimed at ensuring long-term financial sustainability and improved service delivery in South Africa’s metropolitan municipalities.
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