JOHANNESBURG, Aug 7 – The Asian Infrastructure Investment Bank (AIIB) has signed a $500 million sovereign-backed loan with South Africa to support improvements in water and sanitation, electricity and solid waste services across the country’s eight metropolitan municipalities.
The financing will support the Metro Trading Services Program, which aims to modernise critical urban infrastructure, improve municipal service delivery and strengthen the financial and operational performance of local governments.
South Africa’s eight metropolitan municipalities are home to approximately 22 million people and account for around 85% of the country’s economic output. However, they face mounting challenges from ageing infrastructure, rapid urbanisation and increasing climate-related risks.
The programme is designed to reduce non-revenue water and electricity losses, improve solid waste management and enhance institutional capacity, helping municipalities deliver more reliable public services while supporting climate resilience.
It also seeks to improve governance, financial sustainability and accountability in the delivery of essential municipal services, while advancing South Africa’s transition towards low-carbon and climate-resilient urban development.
Commenting on the agreement, AIIB Director General for the Public Sector Clients Department, Rajat Misra, said the programme would strengthen both infrastructure delivery and municipal governance.
According to Misra, “By strengthening municipal governance and improving the performance of essential urban services, the Metro Trading Services Program will enhance infrastructure delivery while supporting South Africa’s climate and development objectives.”
The transaction represents AIIB’s first investment in South Africa, establishing a new partnership between the multilateral development bank and the country to support sustainable infrastructure development.
According to South Africa’s National Treasury, the programme is expected to deliver measurable improvements by 2031, with all eight participating metropolitan municipalities meeting the programme’s minimum performance standards.
The government also expects the initiative to reduce non-revenue water losses from 41% to 28% and lower electricity losses from 22% to 12%, improving the efficiency, reliability and long-term sustainability of municipal services.
National Treasury Director-General Duncan Pieterse said the financing complements broader government efforts to strengthen municipal operations.
According to Pieterse, “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.”
The Asian Infrastructure Investment Bank is a multilateral development institution focused on financing sustainable infrastructure projects and advancing long-term economic development through its “Infrastructure for Tomorrow” strategy.
