South Africa’s eight metropolitan municipalities are set to receive support for major reforms to electricity, water, sanitation and waste services after Germany and France committed €300 million, about R5.6 billion, in concessional financing.
Germany’s KfW Development Bank and France’s Agence Française de Développement (AFD) will provide the loans through National Treasury’s Metro Trading Services Reform programme.
KfW will contribute €200 million, with AFD providing the remaining €100 million.
Financing announced ahead of local government elections
The Metro Trading Services Reform programme was launched in March 2026 to improve the financial and operational performance of municipal trading services.
These services provide basic utilities to more than 22 million people across South Africa’s metros.
The financing announcement comes roughly nine weeks before local government elections, where service delivery performance in these metros is likely to be a central issue for voters.
The loans fall under Germany and France’s Just Energy Transition commitments to South Africa, with the programme contributing to the municipal component of the country’s JET Investment Plan.
Focus on electricity, water and other basic services
A central part of the reform involves ensuring revenue generated by services such as electricity and water is more effectively ring-fenced and reinvested in maintaining and upgrading the infrastructure that produces it.
Many municipalities have struggled with ageing infrastructure, maintenance backlogs, revenue losses and declining service reliability, contributing to increasingly frequent water and electricity disruptions.
The €300 million financing forms part of a much larger effort to change how metropolitan municipalities fund and manage these services.
R54bn performance-based grant programme
National Treasury has also established a performance-based grant programme worth about R54 billion over six years.
Government expects the reforms to help mobilise more than R100 billion in infrastructure investment over that period.
Instead of funding infrastructure projects in isolation, the programme links financial support to improvements in governance, financial management and service delivery.
Finance Minister Enoch Godongwana welcomed the continued partnership with Germany and France in “supporting more reliable services, increased infrastructure investment and stronger, more sustainable cities.”
R5.6bn is financing, not an immediate infrastructure spend
The €300 million commitment is loan financing, not a grant.
It also does not represent R5.6 billion in immediate construction spending.
Instead, the financing provides financial backing for the wider reform programme as South Africa’s metros attempt to rebuild and improve the basic infrastructure on which households and businesses depend.
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