Germany and France, through the KfW Development Bank and Agence Française de Développement (AFD), have committed €300m (about R5.6bn) in concessional loans to support the National Treasury’s Metro Trading Services Reform (MTSR) programme.The programme launched in March is designed to support the turnaround of electricity, water supply, sanitation and waste management services in South Africa’s eight metropolitan municipalities, which collectively serve more than 22-million residents.Many municipalities, including metros such as the economic hub of Johannesburg, are afflicted by mismanagement manifesting itself in fruitless, wasteful and unauthorised expenditure amounting to billions of rand, fraud and corruption, resulting in poor service delivery.“The €300m in concessional financing from KfW Development Bank and AFD strengthens the government’s broader programme of support to improve the governance, financial sustainability and operational performance of essential trading services in metropolitan municipalities,” finance minister Enoch Godongwana said in a statement issued by the National Treasury late on Wednesday.The new loans fall under France and Germany’s Just Energy Transition commitments to South Africa as the MTSR programme will contribute to the implementation of the municipal component of the clean energy plan, the Treasury said.The AFD’s support to the MTSR is also part of its long-standing partnership with South African municipalities, built through direct loans, notably to Johannesburg, eThekwini and Cape Town, aimed at financing municipal infrastructure programmes while supporting policies to reduce inequalities and strengthen resilience to climate change.Last year the government said it was working with metros on a R54bn performance-based incentive that would help them with cash to fix water, electricity and waste management services on the condition they ring-fenced revenue from those services in professionally run utilities that could ensure service delivery.The reforms introduced a performance-linked incentive under the urban development financing grant to strengthen accountability and improve financial performance and service delivery in metropolitan trading services, the Treasury said at the time.Last month Godongwana told Business Day the business sector had pledged resources to support government efforts to address the deepening financial and governance crisis in Johannesburg, which accounts for about 16% of South Africa’s GDP. Business has previously warned the city’s financial woes — official data earlier this year showed it owed creditors R25.2bn — threatened national economic growth.In June the New Development Bank, established by the original Brics members Brazil, Russia, India, China and South Africa, extended a $1bn (about R16bn at current rates) loan for the government to upgrade infrastructure in the eight metros.Wednesday’s statement did not outline the terms of the latest loan, but the Treasury has repeatedly stated it prefers concessional loans from development financiers which are much cheaper to service than market rates.Business Day