National Treasury Unveils R54-Billion Performance-Based Grant to Revitalize South African Metro Infrastructure

National Treasury's new performance-linked grant aims to drive R100bn in metro infrastructure investment. See how Joburg and eThekwini budgets are affected.

By: AXL Media

Published: Mar 19, 2026, 4:57 AM EDT

Source: The information in this article was sourced from Engineering News

A New Model for Municipal Investment

The South African National Treasury has officially introduced a R54-billion performance-linked grant aimed at reversing the decline of essential infrastructure in the country’s eight metropolitan municipalities. Launched by Director-General Dr. Duncan Pieterse, the initiative—known as the Metro Trading Services Reform—seeks to mobilize over R100 billion in total investment over the next six years. To access the funds, municipalities are required to develop "Performance Improvement Action Plans" and match the grant funding with their own internal revenues and borrowings.

Addressing the Revenue-to-Investment Gap

The reform is a direct response to a trend where metropolitan revenues are collected but not reinvested in the systems that generate them. Dr. Pieterse highlighted stark disparities in current municipal budgets; for instance, the City of Johannesburg estimates R11.9 billion in water revenue for the 2025/26 cycle but plans to spend only R1.3 billion (less than 10%) on water infrastructure. Similarly, eThekwini expects to collect R22 billion from electricity charges but has allocated less than 5% for infrastructure upgrades. By ringfencing these revenues, the Treasury intends to ensure that water leaks are fixed, power grids are stabilized, and waste collection is modernized.

Incentivizing Integrated Business Management

A core pillar of the reform is the requirement for metros to run their trading services—water, electricity, and waste—as integrated businesses. This involves creating a single unit of management accountability for each service. The performance-based nature of the grant means that funding is not guaranteed; it is unlocked only when municipalities hit their self-defined targets. This shift aims to move local government oversight from passive observation to active intervention, providing a "carrot and stick" approach to municipal capacity constraints.