South Africa secures $925 million from World Bank to rebuild its ailing cities

The World Bank has approved a $925 million loan to South Africa to help revive its major cities through a six-year urban renewal program estimated to cost three times that amount.

The funding, provided by the International Bank for Reconstruction and Development (IBRD), will support the government’s new Metro Services Trading Program, which rewards cities that meet operational and financial performance targets in water, electricity, and waste management. It marks the World Bank’s first program-for-results initiative in South Africa.

The initiative comes at a crucial time for South Africa, where frustration over failing municipal services is mounting. Frequent power outages, water shortages, and poor waste collection have strained public confidence.

The new program will focus on eight metropolitan areas that together account for 85% of South Africa’s economic output and house more than one-third of its 63 million citizens, Bloomberg reported.

Cities covered under the initiative include Johannesburg, Cape Town, Durban, Pretoria, Ekurhuleni, East London, Bloemfontein, and Gqeberha.

In Johannesburg, the country’s largest city, entire neighbourhoods have endured days-long blackouts amid mounting infrastructure failures and financial mismanagement.

Business Insider Africa earlier reported that Johannesburg, often regarded as Africa’s wealthiest city due to its high concentration of businesses and millionaires, needs an estimated 221 billion rand ($12 billion) to fix its infrastructure challenges.

The broader program aims to curb such breakdowns and restore efficiency across the urban system.

The loan also shows South Africa’s growing engagement with the World Bank after years of limited borrowing. Since 2022, the country has secured about $3 billion in sovereign loans from the lender, signalling a shift toward closer cooperation on fiscal and development priorities.

In June, the World Bank approved a $1.5 billion loan to support South Africa’s structural reforms, focusing on infrastructure improvements and economic growth.

In May, South African President Cyril Ramaphosa said his plan to boost the economy by launching major construction projects has attracted a record 238 billion rand (about $13.3 billion) in investment.

The World Bank has rolled out similar program-for-results initiatives in countries including Turkey, China, and India, but South Africa’s urban overhaul represents one of the most ambitious applications of the model on the continent.