The World Bank has launched the South Africa Metro Trading Services Program, a $925 million initiative aimed at improving key municipal services in eight of the country’s largest metropolitan areas. This marks the first time the World Bank is using its Program-for-Results (PforR) financing instrument in South Africa.
The program targets water supply and sanitation, electricity, and solid waste management services across Buffalo City, Cape Town, Ekurhuleni, Johannesburg, Tshwane, eThekwini, Mangaung, and Nelson Mandela Bay. These municipalities serve more than 22 million people and play a significant role in South Africa’s urban development.
Funding for the program comes from a $925 million loan provided by the World Bank and an additional $2.31 billion from the Government of South Africa. The government uses this funding to create a new performance-based fiscal grant called the Metro Trading Services Grant (MTSG). According to the program design, municipalities do not receive loans directly; instead, they get grants that are released only after meeting specific results. “Should results not be achieved, the grants are not released. This approach incentivizes performance and promotes accountability to citizens,” according to information provided by the World Bank.
The PforR instrument releases funds only after agreed-upon outcomes have been verified. In this case, improvements must be demonstrated in areas such as institutional reform, revenue collection, asset management, and service quality before disbursements occur. “This approach strengthens accountability and ensures a sharp focus on tangible development outcomes and institutional change,” states the World Bank.
South African metros have faced ongoing challenges related to underinvestment in operations and maintenance of infrastructure. Other problems include weak revenue management systems leading to low collection rates, fragmented governance structures within municipal departments, declining reliability of basic services—especially for underserved communities—and inefficiencies in procurement processes.
To address these issues, targeted interventions will focus on enhancing revenue collection through better billing systems; strengthening governance by integrating support functions into trading services departments; improving asset management with comprehensive plans for maintenance; and promoting financial transparency through streamlined reporting procedures.
Expected outcomes from the program include improved financial transparency within municipal trading service departments; stronger revenue management practices; robust asset management systems; higher quality service delivery—particularly benefiting historically underserved or low-income populations—and greater use of data-driven decision-making tools for planning and accountability.