The national treasury is to implement a pilot programme to stabilise and professionalise the management of municipal utilities such as those providing water and electricity, which incur huge losses in many parts of the country.
Many local authorities suffer from an acute lack of expertise, which contributes to bad financial management, inadequate investment in infrastructure and poor service delivery.
The Municipal Utility Reform Programme, which has been developed in conjunction with the African Development Bank (AfDB) and donor partners, is underpinned by a results-based AfDB concessional loan of as much as $400m.
The Treasury said the pilot would be launched in the Mpumalanga municipalities of Mbombela, Govan Mbeki, Lekwa and eMalahleni by the end of 2025.
“It aims to stabilise and professionalise core municipal utilities [water and electricity] by reducing losses, introducing cost-reflective tariffs with protections for poor households, ring-fencing of revenues, improving asset care and enhancing governance and reporting,” the Treasury said.
“Lessons from the pilot will be used to expand it to municipalities in other provinces facing severe service delivery challenges. The scale-up will align with conditional grant reforms and, where appropriate, will disburse grants linked to independently verified milestones to safeguard delivery and fiscal sustainability.”
More on the medium-term budget:
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MTBPS reallocates modest fiscal room — who gains and who loses
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