South Africa has secured a USD 500 million (approximately R9-billion) loan from the Asian Infrastructure Investment Bank to urgently improve basic services in eight metropolitan municipalities, marking the first time the multilateral lender has invested in the country.

The sovereign-backed loan will support the Metro Trading Services Program, targeting critical improvements in water and sanitation, electricity distribution and solid waste management across cities serving approximately 22 million people.

The financing comes as municipalities across South Africa face severe governance and service delivery crises, with many plagued by aging infrastructure, financial mismanagement and corruption scandals that have left residents without reliable access to basic services.

Metropolitan municipalities under strain

South Africa’s eight metropolitan cities generate around 85% of the country’s economic output, yet struggle with mounting pressures from rapid urbanisation, deteriorating infrastructure and increasing climate risks.

Non-revenue water currently stands at 41% across participating metros, while electricity losses reach 22%, representing billions of rand in lost revenue that could otherwise fund essential services.

The Asian Infrastructure Investment Bank’s director general for public sector clients, Rajat Misra, said the program would enhance infrastructure delivery while supporting South Africa’s climate and development objectives.

“By strengthening municipal governance and improving the performance of essential urban services, the Metro Trading Services Program will enhance infrastructure delivery while supporting South Africa’s climate and development objectives,” Misra said on Friday.

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Ambitious targets set for 2031

According to National Treasury, the program aims to reduce non-revenue water from 41% to 28% and lower electricity losses from 22% to 12% by 2031.

All eight participating metropolitan municipalities are expected to meet minimum performance conditions within the same timeframe, delivering more efficient, reliable and sustainable municipal services.

National Treasury director-general Duncan Pieterse said the financing strengthens government’s broader support package to improve governance, financial management and operational performance of trading services in metropolitan municipalities.

The program will help improve financial sustainability, accountability and operational performance while supporting South Africa’s transition to low-carbon, climate-resilient urban development.

The Asian Infrastructure Investment Bank is a multilateral development bank dedicated to financing sustainable infrastructure projects.

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