World Bank and South Africa Announce R55 Billion Plan to Revive Urban Areas

With support from the World Bank, South Africa has initiated a R55 billion strategy aimed at restoring services and infrastructure across eight of its largest cities.

This initiative will utilize a $1 billion loan from the World Bank alongside $2 billion in government funding to provide grants for cities like Johannesburg, Durban, and Cape Town, contingent upon their success in meeting targets for water, sanitation, electricity, and solid waste management as outlined in a new government program.

The project introduces a “targeted performance-based fiscal transfer” to municipalities, according to the World Bank’s response to inquiries. It aims to “support reforms in the trading services” that cities charge their residents for.

Read: Can Joburg fix itself before the G20 Summit?

In response to increasing public demand for improved services amidst frequent power grid failures, water shortages, and inadequate waste collection, the government is launching the Metro Services Trading Program. The African National Congress lost its majority last year for the first time since 1994, partly due to dissatisfaction with service delivery.

The World Bank highlights that “South Africa’s metros are facing a crisis in the provision of basic services, characterized by waning safety, reliability, and accessibility.” It emphasizes that “urgent action is required to reverse the collapse of urban services.”

The program is concentrated on cities that are home to 22 million people, representing over a third of the nation’s population, across nearly 30,000 square kilometers (11,583 square miles)—about 20 times larger than London.

Read: Can the private sector rescue SA from the upcoming water crisis?

Though the South African government currently allocates funds for infrastructure investments in municipalities, there are no performance-based incentives in place.

The program is designed to include a blend of grant reforms along with conditional financial incentives that encourage municipalities to effectively tackle the challenges affecting service delivery, according to the World Bank.

Read: CT mayor capitalizes on JHB’s troubles as Lesufi apologizes to Ramaphosa

The National Treasury has not responded to requests for comments. However, it has mentioned plans for an incentive-based program without detailing specific requirements, targets, or funding in its budget statement earlier this month.

The financial aid would be in addition to approximately $6 billion generated from revenues collected by metropolitan areas and their borrowing, resulting in a total government program of $9 billion, as stated by the World Bank.

Read: Ramaphosa plans to adopt the Durban model to revitalize Johannesburg

The program aims to enhance services, minimize losses in water and electricity, and increase revenue collection.

Other municipalities included in the program encompass Bloemfontein, Pretoria, East London, Gqeberha, and Ekurhuleni metropolitan areas.

Read: Johannesburg urged to rectify its issues ahead of the G20 summit

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