DBSA slashes municipal lending as R16bn in loans turns risky
Has cut its support for municipalities for a second consecutive year but insists it hasn't abandoned the local government sphere.
The Development Bank of Southern Africa (DBSA) has significantly reduced its financial assistance to municipalities in the 2026 fiscal year, with disbursements dropping from R4.6 billion in 2024 to R1.3 billion in 2026. The DBSA lent a total of R31.2 billion to municipalities in 2026, with R16.1 billion earmarked as high-risk stage 2 loans.
A significant portion of the R153.8 million in credit-impaired municipal exposure (0.5% of the total) is composed of R51.8 million in Stage 3 loans and R102 million in purchased or originated credit-impaired loans. The DBSA has flagged municipalities' financial pressures as a risk factor for its lending activities. DBSA chair David Makhura asserts that municipalities require more than just loans and bailouts and emphasizes the need for internal changes, including a professional and technical reset.
He highlights three key steps for the recovery of Johannesburg City (CoJ): addressing infrastructure, fixing institutions, and implementing strong leadership and accountability.
Written by urgent.news from The Citizen's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
