PRETORIA, South Africa (XOL Africa) — South Africa has signed a $1 billion loan agreement with the New Development Bank to finance infrastructure upgrades and reforms to municipal trading services in the country’s metropolitan municipalities, the National Treasury said Tuesday.
The 16-year loan, which has a three-year grace period, will support the Metro Trading Services Reform Programme, a government-led initiative focused on improving the governance, financial sustainability and operational performance of municipal services.
The program covers key trading services including water and sanitation, electricity and energy, and solid waste management.
The New Development Bank, established by the BRICS countries, is financing the program alongside the World Bank, Asian Infrastructure Investment Bank, KfW Development Bank and the French Development Agency, according to the Treasury.
The financing is structured as a performance-based loan, with disbursements linked to institutional improvements and independently verified performance targets approved by metropolitan municipal councils.
The loan has a nominal value of $1 billion, a maturity of 16 years and a three-year grace period. Its interest rate is set at daily SOFR plus 1.18508%.
The Treasury said the financing was prepared in coordination with development partners involved in South Africa’s infrastructure sector.
The government said the program is being implemented through South Africa’s existing legal, fiscal and institutional framework and is intended to support reforms aimed at strengthening municipal services and the financial sustainability of metropolitan governments.
“National Treasury extends its appreciation to the NDB for its support to this government-led reform towards better services for residents and stronger, more sustainable cities,” the Treasury said in a statement.
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