Treasury signs $1bn NDB loan for metro water, power and waste reform
The 16-year performance-based facility ties disbursement to independently verified targets approved by metro councils, with water, electricity and solid waste the first priorities.
National Treasury has signed a $1 billion loan agreement with the New Development Bank to upgrade infrastructure for metropolitan municipal trading services, under a reform programme aimed at how the country’s biggest cities run water, electricity and waste.
The facility carries a 16-year maturity, a three-year grace period and an interest rate of daily SOFR plus 1,18508%. The agreement was announced by the South African Government, and the details below are as set out in its statement on the transaction.
The New Development Bank is financing the Metro Trading Services Reform Programme alongside the World Bank, the Asian Infrastructure Investment Bank, KFW Development Bank and the French Development Agency.
What the programme is meant to fix
The MTSR is a government-led reform programme. Its stated aims are to improve the governance, financial sustainability and operational performance of trading services in metropolitan municipalities, with water and sanitation, electricity and energy, and solid waste management identified as the priority areas.
The financing supports a performance-based reform programme implemented through South Africa’s existing legal, fiscal and institutional framework, rather than through a new structure created for the loan.
That distinction matters for how the money moves. Disbursement is linked to institutional strengthening and to the achievement of independently verified, measurable performance targets, and those targets are approved by metro councils for their trading services. In plain terms, the metros themselves sign off on the benchmarks, and an independent process verifies whether they were met before the next tranche is released.
The terms, and who is answerable
The loan is concessional, according to the statement, on the following terms:
- Nominal value: $1 billion
- Maturity: 16 years
- Grace period: 3 years
- Interest rate: daily SOFR plus 1,18508%
The loan was prepared in coordination with development partners active in South Africa’s infrastructure sector. National Treasury extended its appreciation to the New Development Bank for its support of what it described as a government-led reform towards better services for residents and stronger, more sustainable cities.
Accountability for the programme sits with National Treasury as the borrower and with the metropolitan municipalities as the implementing sphere, since the performance targets are approved by metro councils. Media enquiries on the transaction are directed to Media@treasury.gov.za.
What it means for residents
Trading services are the parts of a municipality that are meant to pay for themselves, chiefly water, electricity and refuse removal. When those services run at a loss, the shortfall lands on the same household budget twice, once through a bill that does not match the service delivered, and again through the rates and national transfers that cover the gap.
The programme’s focus on governance and financial sustainability is aimed at that gap. The infrastructure upgrades the loan is meant to fund sit in the same three areas that dominate most metro service complaints: water and sanitation, electricity and energy, and solid waste management.
Because the facility is performance-based, the first test is not the signing. It is whether the targets the metro councils approve are specific enough to be verified, and whether the institutional work behind them is done on schedule.
The next dated step
The loan has been concluded and the terms are fixed. What follows is the approval of performance targets by metro councils for their trading services, the point at which the reform programme’s measurable commitments become public and checkable.
National Treasury’s full statement is available at https://www.gov.za/news/media-statements/treasury-concludes-1-billion-loan-new%C2%A0development-bank-ndb-15-sep-2026.
