Pretoria: The government has unveiled an incentive grant program that will unlock R100 billion in investments to encourage metropolitan municipalities to enhance their services in water, electricity, sanitation, and refuse removal. 'Over the past decade, we have witnessed the steady erosion of municipal capabilities in many parts of the country: infrastructure failures, unreliable services, financial stress, and declining public confidence,' stated National Treasury Director-General Dr. Duncan Pieterse on Wednesday.
According to South African Government News Agency, the National Treasury has introduced a comprehensive package of local government reforms for South Africa's eight largest cities to restore their ability to deliver services effectively. The Metro Trading Services Reform aims to stabilize and strengthen service delivery through interventions in municipal governance and financial management.
The reforms encompass legislative changes, stronger enforcement of funded budgets, and financial recovery plans. They also include targeted investments in municipal infrastructure, smart metering, and new approaches to ensure public funds are matched to credible delivery.
Dr. Pieterse highlighted the specific challenges faced by cities, noting that many struggle to provide adequate services or collect sufficient revenue. The collected revenue often goes into a general municipal fund instead of being invested back into infrastructure maintenance and upgrades. The Metro Trading Service Reform intends to run services like integrated businesses, with a single unit of management accountability and revenues ringfenced for reinvestment.
When the budget was tabled in February, the National Treasury proposed that when municipal capacity to spend is an issue, funds will be transferred to entities such as the Development Bank of South Africa and Municipal Infrastructure Support Agent to ensure spending occurs within the municipality to benefit residents.
Collaborating with cities and governmental departments, including the Department of Cooperative Governance, the reform plans to mobilize R54 billion in performance-linked incentives, with R27.7 billion allocated over the medium term, to restore operational and financial sustainability.
Metros will need to meet performance targets outlined in their Performance Improvement Action Plans to access the incentives, aligning with Operation Vulindlela, which focuses on removing constraints to economic growth.
Dr. Pieterse emphasized the vital role cities play in the national economy, noting that cities are engines of growth, inclusion, and innovation. The Metro Trading Services Reform programme is a national government initiative, endorsed by Cabinet, prioritizing economic development and improving social outcomes.
This performance-based grant aims to incentivize metropolitan municipalities to reverse the long-term decline in essential services such as electricity, water and wastewater, and solid waste management. Participation in the incentive program is voluntary.