Multilateral development bank the Asian Infrastructure Investment Bank (AIIB) and South Africa have signed a $500-million sovereign-backed loan to support the South Africa Metro Trading Services Programme, which is aimed at improving the financial sustainability, accountability and operational performance of municipal services, including water supply and sanitation, electricity and solid waste management services, while supporting the country's transition to low-carbon, climate-resilient urban development.

The programme is co-financed with the World Bank as part of a broader $3-billion programme led by the South African government. The financing marks AIIB’s first investment in South Africa, establishing a new partnership to advance the country’s sustainable infrastructure priorities.

Through a performance-based financing approach, the Metro Trading Services Programme supports reforms that strengthen governance, operational efficiency and financial management while incentivising climate-smart investments in essential urban services.

South Africa's National Treasury notes that the country's metropolitan municipalities are home to about 22-million people and generate about 85% of the country’s economic output, but face mounting challenges from aging infrastructure, rapid urbanisation and increasing climate risks.

The Metro Trading Services Programme seeks to deal with these pressures by helping reduce nonrevenue water and electricity losses, improve solid waste management and strengthen institutional capacity, contributing to more reliable service delivery and greater climate resilience.

By 2031, the programme is expected to enable all eight participating metropolitan municipalities to meet minimum performance conditions, reduce nonrevenue water from 41% to 28% and lower electricity losses from 22% to 12%, delivering more efficient, reliable and sustainable municipal services.

"South Africa's metropolitan municipalities are central to the country's economic development and climate transition. This investment marks the beginning of AIIB's partnership with South Africa and reflects our shared commitment to building more resilient, sustainable and well-managed cities.

"By strengthening municipal governance and improving the performance of essential urban services, the programme will enhance infrastructure delivery, while supporting South Africa's climate and development objectives,” comments AIIB Public Sector Clients Department (Region1) director-general Rajat Misra.

“The AIIB financing strengthens the government’s broader package of support to improve the governance, financial management and operational performance of trading services in metropolitan municipalities. We welcome AIIB as a new development partner and look forward to building a long-term partnership that supports better services for residents and stronger, more sustainable cities,” adds Treasury director-general Duncan Pieterse.