South Africa has signed a $1-billion loan agreement with development finance institution the New Development Bank (NDB) to upgrade metropolitan municipal services infrastructure as part of the Metro Trading Services Reform Programme (MTSR).

The MTSR is a government-led reform programme aimed at improving the governance, financial sustainability and operational performance of municipal trading services in metropolitan municipalities, particularly in water and sanitation, electricity and energy and solid waste management.

The financing supports a government-led, performance-based reform programme implemented through South Africa’s existing legal, fiscal and institutional framework.

This is a performance-based loan with financing linked to institutional strengthening and the achievement of independently verified measurable performance targets that are approved by metropolitan councils for their trading services, says Treasury.

The NDB's financing forms part of the South African government’s broader efforts to reform municipal trading services in metropolitan municipalities.

The NDB is financing the programme with finance institutions the World Bank, the Asian Infrastructure Investment Bank, KFW Development Bank and the French Development Agency, says National Treasury.

The loan was prepared in coordination with development partners active in South Africa's infrastructure sector, it adds.

The loan's concessional financial terms include a maturity of 16 years, a grace period of three years, and an interest rate of daily secured overnight financing rate plus 1.18508%.

National Treasury thanked the NDB for its support of this government-led reform towards better services for residents and stronger, more sustainable cities.