Government secures R5.6bn loan to fix metro trading services

The government has secured a €300 million (R5.6 billion) concessional loan to support National Treasury's Metro Trading Services Reform (MTSR) programme, aimed at improving service delivery and upgrading ageing infrastructure in South Africa's metropolitan municipalities, SAnews reports.

The programme targets a turnaround of the three essential trading services – electricity, water and sanitation, and solid waste management – across the country's eight metros, which together serve more than 22 million residents.

Finance Minister Enoch Godongwana welcomed the concessional financing from Germany's KfW Development Bank and France's Agence Française de Développement (AFD) in a statement on Wednesday. He said the funding strengthens government's broader push to improve governance, financial sustainability and operational performance in metro trading services, and welcomed the ongoing partnership with Germany and France in support of more reliable services, greater infrastructure investment and more sustainable cities.

The programme is designed to improve the financial and operational performance of these trading services, ensuring that revenue generated is reinvested into infrastructure to cut outages and reduce investment backlogs. It also rests on the premise that the financial sustainability of metros is central to driving economic growth through better service delivery.

The €200 million from KfW and €100 million from AFD fall under the Just Energy Transition mandate between France, Germany and South Africa, with the MTSR set to contribute to the municipal component of the JET Investment Plan. A joint statement from National Treasury, KfW and AFD noted that improving essential municipal services is a prerequisite for delivering the Just Energy Transition, and will help unlock the public and private investment needed to address infrastructure backlogs and modernise electricity distribution networks.

For AFD, the support forms part of a long-standing partnership with South African municipalities, having previously issued direct loans to Johannesburg, eThekwini and Cape Town aimed at financing municipal infrastructure while supporting policies to reduce inequality and strengthen climate resilience.

KfW's country director for South Africa, Cornelia Tittmann, credited National Treasury's leadership in developing a programme set to improve service delivery and living conditions for millions of South Africans, adding that South Africa's success matters to Europe as a key continental partner, reflected in continued cooperation across trade, investment and development.

AFD's regional director for Southern Africa, Marie-Hélène Loison, commended Treasury for leading a programme that brings together eight municipalities and national departments around a shared reform agenda, saying it would help protect and sustain investment in essential urban services while delivering tangible improvements for residents and businesses.