The World Bank has approved a $925 million loan to South Africa to support a six-year program valued at three times that amount, aimed at revitalizing the country’s major cities.
According to Bloomberg, the funding, provided by the International Bank for Reconstruction and Development (IBRD), will allow the National Treasury to reward municipalities that achieve operational and financial performance targets in urban services with additional resources. This is the first “program-for-results” operation implemented by the World Bank in the country.
“The goal is to incentivize real performance improvements, promote accountability, and drive institutional reforms,” said Satu Kahkonen, Director of the World Bank’s South Africa division, in a statement released on Monday (10).
The government is creating the so-called Metropolitan Services Program amid growing citizen pressure for better services, in light of recurring failures in urban electricity networks, water cuts, and irregular waste collection. In last year’s elections, the African National Congress (ANC) lost its absolute majority for the first time since 1994, partly due to public dissatisfaction with poor delivery of public services.
The program will cover eight cities that generate 85% of South Africa’s GDP and host more than a third of the country’s 63 million inhabitants. The focus will be on improving water and electricity supply, as well as waste management, while also strengthening the cities’ capacity to handle climate shocks and attract private partnerships for service delivery. In Johannesburg, the country’s largest city, frequent blackouts have left entire neighborhoods without power for days, while the municipal administration faces a series of financial scandals.
The loan represents a deepening of relations between the World Bank and South Africa, which, prior to the pandemic, was reluctant to rely on multilateral financing. Since early 2022, the country has already obtained three sovereign loans from the institution, totaling about $3 billion.
In addition to Johannesburg, the program will include Cape Town and the municipalities responsible for Durban, Pretoria, Ekurhuleni, East London, Bloemfontein, and Gqeberha.
Source: Diário Económico
