AfDB Approves $400m for Mpumalanga Municipal Utility Reform

The reform programme will target water and electricity losses, weak revenue collection and damaged infrastructure that have placed pressure on municipal utilities.

The African Development Bank Group has approved a $400 million loan to support the Mpumalanga Municipal Utility Reform Programme, giving South Africa a major funding boost for efforts to improve local water and electricity services in areas affected by the shift away from coal.

National Treasury announced the programme during the 2025 Medium Term Budget Policy Statement. It is linked to South Africa's Just Energy Transition and is designed to help municipalities strengthen essential services while adapting to the economic pressures created by decarbonisation.

Focus on water, power and revenue

The reform programme will target water and electricity losses, weak revenue collection and damaged infrastructure that have placed pressure on municipal utilities. It will also support better utility management, stronger maintenance planning and performance-based contracts that can bring private-sector expertise into service delivery.

National Treasury's Ogalaletseng Gaarekwe said the initiative will test a support model that improves operations, planning, infrastructure and municipal capability. The wider goal is to provide more reliable and sustainable water and energy services for communities in Mpumalanga.

Municipal capacity seen as key to development

AfDB Vice President for Power, Energy, Climate and Green Growth Kevin Kariuki said financially sustainable municipal utilities are central to South Africa's long-term development.

He said the programme could improve electricity delivery, build more resilient local institutions and create a model that can be used for municipal reforms in other parts of the country.

Mpumalanga is particularly important to the Just Energy Transition because of its role in South Africa's coal-based energy economy. Stronger municipal systems could help communities manage the transition while maintaining services needed by households, businesses and local industries.

UK guarantee supports the financing

The $400 million financing is backed by a guarantee from the United Kingdom's Foreign, Commonwealth and Development Office through the Just Energy Transition Partnership.

The FCDO will also provide technical assistance to support National Treasury and other partners involved in delivering the programme.

Acting British High Commissioner to South Africa Lisa Weedon said the initiative shows how innovative financing can help municipalities provide more dependable services and create conditions for investment and local economic growth.

A model for wider reform

The programme is expected to combine financial support with practical reforms that address the operating problems facing municipal utilities. Reduced losses, improved billing and collection, repaired infrastructure and stronger management can help municipalities build a more stable financial base.

If the model succeeds, it could offer a useful framework for improving municipal water and electricity services across South Africa while supporting the country's wider energy transition.