World Bank to help save major South African cities from collapse

South Africa, with the help of the World Bank, has a $3 billion (R54.6 billion) plan to reverse the decline in services and infrastructure in eight of its biggest cities. 

It will use a $1 billion (R18.2 billion) loan from the World Bank, coupled with $2 billion (R36.4 billion) of government money, to finance grants for cities including Johannesburg, Durban and Cape Town that meet targets in providing water, sanitation, electricity and solid-waste processing under a new government program.

The World Bank said in response to a query that the initiative “consists of a new, targeted performance-based fiscal transfer” to the municipalities. It will “support reforms in the trading services” cities charge residents for, it added. 

The government is setting up the Metro Services Trading Program as it faces increasing pressure from citizens to improve services amid recurrent breakdowns of urban power-transmission grids, regular water outages and lax collection of refuse.

In elections last year, the African National Congress lost its outright majority for the first time since the advent of democracy in 1994 partly because of anger over poor service delivery. 

“South Africa’s metros are facing a crisis in the provision of basic services, marked by declining safety, reliability and accessibility,” the World Bank said in documents about the program. “Urgent action is needed to reverse the collapse of urban services.” 

The program focuses on cities where 22 million people, or more than a third of the country’s population, live across an area of almost 30,000 square kilometers (11,583 square miles). That’s almost 20 times the size of London. 

While South Africa’s government currently allocates money to municipalities for infrastructure investments, there is no incentive based on results. 

The program “will involve a combination of grant reforms together with the provision of conditional financial incentives that encourage municipalities to aggressively target the challenges affecting service delivery,” the World Bank said. 

The National Treasury didn’t respond to a request for comment. In its budget statement earlier this month, the Treasury mentioned plans for an incentive-based program without giving details of requirements, targets, or funding.

The money provided would be in addition to about $6 billion (R109.2 billion) sourced from revenue collected by the metropolitan areas and their borrowing making for a $9 billion (R163.8 billion) government program, the World Bank said. 

The focus will be on improving services, reducing water and electricity losses and collecting more revenue. 

Other municipalities that fall under the program include the cities or metropolitan areas of Bloemfontein, Pretoria, East London, Gqeberha, and Ekurhuleni.