Key points
- The African Development Bank has approved a $400 million loan for utility reforms in South Africa’s Mpumalanga Province.
- The programme aims to improve electricity and water services while supporting the country’s Just Energy Transition.
- The initiative will strengthen municipal utilities, rehabilitate infrastructure and encourage private sector participation.
- About 1.2 million people across four municipalities are expected to benefit.
Main story
The African Development Bank (AfDB) Group has approved a $400 million loan to support South Africa’s Mpumalanga Municipal Utility Reform Programme, aimed at improving electricity and water services in selected municipalities.
In a statement on Thursday, the bank said the programme would enhance the quality, reliability and financial sustainability of utility services across Mpumalanga Province while supporting South Africa’s Just Energy Transition.
According to the AfDB, the initiative will reduce electricity and water losses, improve revenue collection, rehabilitate critical infrastructure and strengthen municipal utility management.
The programme will also promote private sector participation through performance-based contracts designed to improve service delivery.
The bank said the reforms are expected to reduce greenhouse gas emissions, create jobs, strengthen municipal governance and improve climate resilience in coal-dependent communities.
It added that the programme would serve as a pilot that could be replicated in other South African municipalities and countries pursuing similar utility reforms.
AfDB Vice-President for Power, Energy, Climate and Green Growth, Kevin Kariuki, said stronger municipalities were essential to South Africa’s long-term development.
The bank said its financing is backed by a guarantee from the United Kingdom’s Foreign, Commonwealth and Development Office (FCDO) under the Just Energy Transition Partnership guarantee framework, with additional technical assistance for project preparation.
The Development Bank of Southern Africa will implement the programme through a dedicated Programme Management Office under the National Treasury and the Department of Cooperative Governance.
The participating municipalities are eMalahleni, Lekwa, Govan Mbeki and Mbombela, serving approximately 1.2 million residents.
The programme will also support the Inkomati-Usuthu Catchment Management Agency in strengthening integrated water resource management between 2026 and 2031.
The issues
South Africa’s transition away from coal requires significant investment to modernise municipal infrastructure, improve utility performance and ensure communities continue to receive reliable electricity and water services while advancing climate goals.
What’s being said
“By strengthening the financial sustainability of municipal utilities, this operation will improve electricity delivery, build more resilient local institutions and establish a replicable model for reforms.” — Kevin Kariuki, AfDB Vice-President for Power, Energy, Climate and Green Growth
What’s next
Implementation of the reform programme will begin through the Development Bank of Southern Africa, with participating municipalities expected to carry out infrastructure upgrades and institutional reforms between 2026 and 2031.
Bottom line
The AfDB’s $400 million financing is expected to strengthen municipal utility services, support South Africa’s energy transition and provide a model for infrastructure reforms across the region.
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