The African Development Bank Group has approved a $400 million loan to support major reforms in municipal electricity and water services across South Africa’s Mpumalanga Province.
The financing will support the Mpumalanga Municipal Utility Reform Programme, a results-based initiative designed to improve the efficiency, reliability and financial sustainability of public utilities in selected municipalities.
Loan disbursements will be linked to independently verified improvements in utility performance and service delivery. Funds will only be released after agreed results are achieved, helping strengthen accountability and ensure investments create lasting benefits for communities.
The programme will support South Africa’s Just Energy Transition by improving municipal services in coal-dependent communities affected by the shift away from coal-fired electricity generation.
Key priorities include reducing water and electricity losses, rehabilitating critical infrastructure, improving revenue collection and strengthening municipal utility management. The programme will also encourage private-sector participation through performance-based contracts.
The African Development Bank said stronger and more financially sustainable municipal utilities would improve access to reliable electricity and water while helping build more resilient local institutions.
The $400 million financing is backed by a guarantee from the United Kingdom’s Foreign, Commonwealth and Development Office under the Just Energy Transition Partnership framework. The UK also provided technical assistance during programme preparation.
Implementation will be led by the Development Bank of Southern Africa through a dedicated Programme Management Office. South Africa’s National Treasury and Department of Cooperative Governance will oversee the initiative.
The participating municipalities are eMalahleni, Lekwa, Govan Mbeki and Mbombela. Around 1.2 million people are expected to benefit from improved electricity and water services.
The five-year programme will run from 2026 to 2031 and will also support the Inkomati-Usuthu Catchment Management Agency to strengthen integrated water resource management.
Planned activities include customer and connection audits, smart and bulk metering, repairs to electricity and water networks, pressure management and measures to reduce non-revenue water.
The programme will also support LED street-light upgrades, alternative energy systems in public buildings and stronger municipal revenue collection systems.
The initiative is expected to improve basic services, create jobs, reduce greenhouse gas emissions, strengthen municipal governance and improve climate resilience in communities affected by the energy transition.
As a national pilot, the programme could provide a scalable model for municipal utility reform across South Africa and other countries facing similar infrastructure and service-delivery challenges.
