Africa’s richest country and World Bank unveil $3 billion plan to rescue its cities

South Africa, in partnership with the World Bank, has launched a $3 billion initiative to restore essential services and improve infrastructure in eight of its largest cities.

The plan includes a $1 billion loan from the World Bank, supplemented by $2 billion in government funding, to support municipalities such as Johannesburg, Durban, and Cape Town, according to Bloomberg.

In August 2023, Business Insider Africa reported that Johannesburg, often recognized as Africa’s wealthiest city due to its high concentration of businesses and millionaires, requires 221 billion rand ($12 billion) to resolve its infrastructure crises.

According to a city council review, these challenges include widespread power outages caused by failures in the distribution network, delayed pothole repairs, and severe water shortages, with some areas enduring up to 11 days without water in March 2024.

The economic impact has been severe. Power disruptions alone have significantly damaged the economy, with the central bank estimating that load shedding costs South Africa $51 million in lost productivity.

Performance-based grants for cities

As part of the new government initiative, cities that achieve performance targets in water supply, sanitation, electricity distribution, and waste management will receive financial grants.

To address growing public frustration, the government is also launching the Metro Services Trading Program, which aims to tackle urban power grid failures, mitigate recurring water shortages, and improve waste collection efficiency.

The Metro Services Trading Program targets South Africa’s largest urban centres, home to 22 million people, spread across nearly 30,000 square kilometres (11,583 square miles), an area almost 20 times the size of London.

The Metro Services Trading Program will be backed by an additional $6 billion generated from municipal revenue and borrowing, bringing the total funding for the initiative to $9 billion, according to the World Bank.

In addition to Johannesburg, Durban, and Cape Town, the initiative will also support Bloemfontein, Pretoria, East London, Gqeberha, and Ekurhuleni.

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