Small and medium-sized municipalities in South Africa would benefit from a R1,1-billion commitment made by Agence Française de Développement Group (AFD) and its international cooperation arm, Proparco, to the Development Bank of Southern Africa's (DBSA's) Targeted Infrastructure Programme (TIP).

AFD CEO Jean-Michel Severino and DBSA CEO Paul Baloyi on Wednesday signed the agreement, which was expected to assist local municipalities in achieving their basic infrastructure investment programmes.

The DBSA provided long-term concessional finance through TIP to enable the most under-resourced municipalities to access funding for their infrastructure expenditure to improve service delivery.

"The AFD-DBSA partnership is helping to fulfill this by focusing on municipal financing for municipal infrastructure and essential services. Further, our partnership with the DBSA and our involvement in the Southern African Development Community is part of our efforts to promote economic integration on the continent," Severino said.

Both development finance institutions have committed to providing grant and capacity building initiatives.

AFD has already provided R46,4-million, out of a total of R86,1-million, to the DBSA for a joint feasibility study fund on regional infrastructure projects.

The French development finance institution would also contribute a grant towards the Pan African Training Academy, a professional training programme in water infrastructure project management.

In its last financial year, the DBSA contributed R160-million to capacity development and deployment initiatives.

Between 1996 and 2009, AFD issued six credit lines totaling R2,4-billion to the DBSA for refinancing social infrastructure around the country.

The DBSA also held a 10% equity stake in Proparco.