South Africa’s eight metropolitan municipalities are now able to tap into a new National Treasury grant, backed by World Bank funding of $925-million (about R16-billion), if they are able to show tangible service-delivery progress in the areas of water supply and sanitation, electricity, and solid waste management.

Finance Minister Enoch Godongwana reports that the six-year Metro Trading Services programme has been designed to support the turnaround of essential services in the metros of Buffalo City, Cape Town, Ekurhuleni, Johannesburg, Tshwane, eThekwini, Mangaung, and Nelson Mandela Bay.

“Metros will unlock the incentive grant funding by demonstrating improved institutional and service-delivery performance in water supply and sanitation, electricity and solid waste management,” Godongwana explains in a statemented that has been issued jointly by the National Treasury and the World Bank.

He also confirms that the trading services reform is a flagship government-wide reform under Operation Vulindlela Phase II, approved by the Cabinet in March.

The programme forms part of a larger $3-billion (about 52-billion) government effort, with the $925-million World Bank loan being used to fund the performance-based fiscal grant.

The World Bank board of executive directors has approved the grants as part of the ‘South Africa Metro Trading Services Program’, a first-of-its-kind financing instrument for South Africa that links the disbursement of funds directly to the achievement of specific results.

The bank says the ‘programme-for-results’ initiative aims to improve the accountability, financial health, and operational performance of essential urban services in the country’s eight largest metros, which are home to 22-million people and account for 85% of South Africa’s economic activity.  

Metros will receive grants from the national government, based on results achieved, with no funds released if a metro fails to achieve the results, so as to incentivise performance.

“The Metro Trading Services Program represents a milestone in South Africa’s partnership with the World Bank Group, showcasing a shift toward results-driven financing to accelerate progress in public service delivery and governance,” World Bank division director for South Africa Satu Kahkonen explains.

“This operation is designed to incentivise real performance improvements, accountability and institutional reforms through a results-based approach, contributing to better lives and livelihoods in South Africa,” she adds.