South Africa’s National Treasury has officially launched the Metro Trading Services Reform, a major initiative allocating R54 billion in performance-linked incentives over six years to encourage the country’s eight metropolitan municipalities to improve essential services, including water, sanitation, electricity, and solid waste management.
The reform, announced following commitments outlined by the finance minister in the previous year’s budget, seeks to address persistent challenges in service delivery within metros, which serve as hubs for the majority of the population and drive key economic activities. Poor performance in these areas has led to issues such as water crises, sewer overflows in streets, and instances where businesses have relocated due to unreliable services.
Ogalaletseng Gaarekwe, Deputy Director-General for Intergovernmental Relations at the National Treasury, explained that the programme partners with metros to rehabilitate and strengthen their trading services. Metros were required to submit council-approved turnaround strategies for water and sanitation, electricity and energy, and solid waste services. All eight metros have now submitted these strategies, with Nelson Mandela Bay being the last to do so in late July last year after initially missing the deadline.
To access incentives, metros must develop Performance Improvement Action Plans, setting their own targets that are reviewed to ensure they are realistic and meaningful. Incentives are awarded to the municipalities themselves—not individual officials—and funds must be invested directly into the relevant trading services.
In the first phase, participating metros received just below R2 billion. The overall R54 billion is provided as a conditional grant, with the expectation that metros match this amount through their own revenue and investments over time, as the infrastructure backlog far exceeds the national contribution.
Independent verification assessors are being appointed to evaluate reported progress starting around August, ensuring that claimed achievements are legitimate before incentives are disbursed. This process applies to implementation in the current financial year.
Gaarekwe emphasised a collaborative approach rather than punitive intervention, noting that National Treasury has assessed each metro’s capacity and will provide technical support where needed. While legislative powers for intervention exist, the focus is on partnership and assistance to make the reform succeed. Failure to meet targets would result in withheld incentives, effectively impacting the metro’s resources.
The six-year programme is designed for sustainability beyond the incentive period. Post-six years, National Treasury will continue monitoring to ensure metros allocate adequate budgets for maintenance and ongoing investment in these services, building long-term financial and operational viability.
The initiative aims to reduce metros’ reliance on grants, promote business-like management of trading services, ring-fence revenues for reinvestment, and ultimately unlock broader economic benefits by improving service reliability for citizens and businesses.