AfDB Approves $400m Loan for South Africa’s Municipal Utility Reforms
The African Development Bank (AfDB) Group has approved a 400 million dollar loan to support South Africa’s Mpumalanga Municipal Utility Reform Programme aimed at improving electricity and water services.
The bank said in a statement on Thursday that the programme would enhance the quality, reliability and financial sustainability of utility services in selected municipalities across Mpumalanga Province.
It said the initiative would support South Africa’s Just Energy Transition by helping municipalities affected by the country’s gradual shift away from coal.
According to the bank, the programme will reduce electricity and water losses, improve revenue collection, rehabilitate critical infrastructure and strengthen municipal utility management.
It added that the initiative would also encourage private sector participation through performance-based contracts to improve service delivery.
The AfDB further said that the programme was expected to reduce greenhouse gas emissions, create jobs, improve municipal governance and strengthen climate resilience in coal-dependent communities.
It added that the initiative would serve as a pilot that could be replicated across other municipalities in South Africa and countries facing similar challenges.
Kevin Kariuki, AfDB Vice-President for Power, Energy, Climate and Green Growth, said stronger municipalities were critical 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,” he said.
The bank also said its financing was backed by a guarantee from the United Kingdom’s Foreign, Commonwealth and Development Office (FCDO) under the Just Energy Transition Partnership guarantee framework.
It said that the FCDO was also providing technical assistance to support project preparation. Lisa Weedon, Acting British High Commissioner to South Africa, described the programme as an example of innovative financing supporting improved municipal service delivery.
“We are pleased to support the National Treasury and its partners in delivering this important initiative while advancing South Africa’s Just Energy Transition,” she said.
The bank disclosed that the Development Bank of Southern Africa would implement the programme through a dedicated Programme Management Office under the National Treasury and the Department of Cooperative Governance.
It said the participating municipalities include eMalahleni, Lekwa, Govan Mbeki and Mbombela, serving about 1.2 million people.
According to the statement, the programme will also support the Inkomati-Usuthu Catchment Management Agency to strengthen integrated water resource management between 2026 and 2031.
Ogalaletseng Gaarekwe, South Africa’s National Treasury Deputy Director-General for Intergovernmental Relations, said the initiative would improve municipal operations, planning and infrastructure.
He said the programme would help provide more reliable and sustainable water and energy services while supporting the country’s Just Energy Transition objectives.
The AfDB said the initiative underscored its commitment to supporting South Africa’s infrastructure reforms, climate-resilient development and inclusive economic growth.
It added that linking financing to verified results demonstrated how strategic partnerships and institutional reforms could strengthen municipalities and improve essential public services. #AfDB Approves $400m Loan for South Africa’s Municipal Utility Reforms#
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