South Africa lands $349 million international funding to reform municipal utilities

South Africa has secured €300 million ($349 million) in concessional financing from Germany and France to overhaul municipal utilities, improve service delivery and upgrade ageing infrastructure across the country’s eight metropolitan municipalities.

The financing will support the National Treasury’s Metro Trading Services Reform (MTSR) programme, targeting three essential services: electricity, water supply and sanitation, and solid waste management.

The eight metros collectively serve more than 22 million residents, making the programme a major test of South Africa’s efforts to improve municipal finances, infrastructure and public services.

KfW, AFD back municipal reform

The funding comprises a €200 million ($232 million) loan from KfW Development Bank and €100 million ($116 million) from Agence Française de Développement (AFD).

The loans fall under Germany and France’s Just Energy Transition mandate and are expected to support the municipal component of South Africa’s Just Energy Transition Investment Plan.

The programme will finance municipal infrastructure while supporting reforms aimed at reducing inequality and strengthening cities’ resilience to climate change.

South Africa’s Finance Minister Enoch Godongwana welcomed the financing, saying the partnership would help improve the governance, financial sustainability and operational performance of essential municipal services.

“We welcome the continued partnership of Germany and France in supporting more reliable services, increased infrastructure investment and stronger, more sustainable cities,” Godongwana said.

National Treasury, KfW and AFD said improving municipal services is critical to delivering South Africa’s energy transition and attracting public and private investment needed to address infrastructure backlogs and modernize electricity distribution networks.

KfW and AFD support South Africa’s cities

Cornelia Tittmann, KfW’s Country Director for South Africa, praised National Treasury’s leadership in developing a programme designed to improve living conditions and service delivery for millions of South Africans.

Marie-Hélène Loison, AFD’s Regional Director for Southern Africa, also commended National Treasury for bringing together the eight metropolitan municipalities and national departments around a shared reform agenda.

KfW Development Bank, Germany’s state-owned promotional and development bank, supports economic, social and ecological transformation worldwide. Founded in 1948 to help rebuild postwar Germany, KfW later expanded its development-finance operations internationally.

Agence Française de Développement, meanwhile, is a French public financial institution responsible for implementing France’s official policies on sustainable development and international solidarity.

The €300 million ($349 million) financing gives South Africa additional funding to tackle municipal infrastructure gaps while linking urban service reforms to its broader energy transition and climate investment agenda.