A $400 million African Development Bank loan will strengthen municipal services in Mpumalanga through infrastructure upgrades, utility reform and improved water and electricity management.
The African Development Bank (AfDB) Group has approved a $400 million loan to support the Mpumalanga Municipal Utility Reform Programme, strengthening municipal services while advancing South Africa’s Just Energy Transition.
Announced by National Treasury during the 2025 Medium Term Budget Policy Statement, the programme aims to improve the financial and operational performance of municipalities most affected by the country’s transition to a low-carbon economy.
The initiative will focus on reducing water and electricity losses, improving revenue collection, repairing critical infrastructure, strengthening utility management and encouraging greater private-sector participation through performance-based contracts.
National Treasury’s Ogalaletseng Gaarekwe said the programme represents an important step towards improving the reliability and sustainability of municipal services.
“We see the Mpumalanga Municipal Utility Reform Programme as an important step towards improving and stabilising municipal services.
“It will test a support model that strengthens operations and maintenance, planning, infrastructure, and municipal capability, helping to provide more reliable and sustainable water and energy services while advancing the Government’s Just Energy Transition goals,” Gaarekwe said.
AfDB Vice President for Power, Energy, Climate and Green Growth Kevin Kariuki said strong municipalities are essential for South Africa’s long-term development.
“Strong municipalities are fundamental to South Africa’s long-term development.
“By strengthening the financial sustainability of municipal utilities, this operation will improve electricity delivery, build more resilient local institutions, and establish a replicable model for reforms that strengthen municipalities across South Africa,” Kariuki said.
The financing is supported by a guarantee from the United Kingdom’s Foreign, Commonwealth and Development Office (FCDO) through the Just Energy Transition Partnership, with the FCDO also providing technical assistance to support implementation.
Acting British High Commissioner to South Africa Lisa Weedon said the programme demonstrates how innovative financing can help municipalities improve service delivery while creating conditions for greater investment and economic growth.
The Mpumalanga Municipal Utility Reform Programme is expected to strengthen municipal capacity, improve infrastructure management and create a model that can be replicated in municipalities across South Africa.
