South Africa pledged $2.5 billion on Thursday in a three-year drive to boost services such as water, roads and sanitation - keeping a key election promise of the ruling African National Congress.
Local and Provincial Government Minister Sydney Mufamadi said the 15.6 billion rand ($2.52 billion) Municipal Infrastructure Grant would bring essential services to hundreds of thousands of poor households.
Officials say the grant will also help the government achieve its goal of halving unemployment and poverty by 2014.
"Our goal is to ensure that over 375,000 households benefit through the provision of clean water and that over 300,000 households benefit through access to basic sanitation in the 2004/5 financial year," Mufamadi said in a statement.
President Thabo Mbeki's ANC made service delivery a key part of its platform ahead of general elections in April, which helped to boost the former liberation movement to its strongest win since it triumphed over apartheid in 1994.
Unemployment and poverty remain severe problems in South Africa, where as much as 40 percent of the population is jobless and huge income gaps between white and black help to fuel one of the highest crime rates in the world.