South Africa Secures $1.5bn World Bank Loan

South Africa has secured a $1.5 bn Development Policy Loan from the World Bank to support structural reforms in its electricity, freight logistics and water and sanitation sectors, as the government pushes to lift economic growth and create hundreds of thousands of jobs.

The loan agreement, signed between the National Treasury and the World Bank’s International Bank for Reconstruction and Development, is the fourth stand-alone development policy loan between the two parties since 2022 and the first to include the water and sanitation sector.

The reforms supported by the programme are projected to help create nearly 600,000 direct and indirect jobs by 2032, according to World Bank economic modelling.

South Africa’s Finance Minister Enoch Godongwana said the loan reflected the government’s determination to remove infrastructure constraints that had held back growth and employment for too long.

“This programme reflects our government’s determination to remove the infrastructure constraints that have held back growth and job creation for too long,” he said.

The loan, which carries a 15-year maturity including a three-year grace period and an interest rate of six-month SOFR plus 1.35 per cent, offers more favourable terms than those typically available on international capital markets.

Together with financing from other multilateral lenders, it has enabled the government to meet its $3.2bn foreign currency borrowing requirement for the 2026/27 financial year.

The World Bank said the programme built on reforms already showing tangible results, noting that load-shedding had been virtually eliminated for the past 18 months, private investment in renewable energy had increased sixfold, and freight volumes through rail and ports had risen by more than 50 per cent since 2023.

New measures under the programme include the launch of a competitive wholesale electricity market, expanded private investment in transmission infrastructure, and South Africa’s first port terminal concession in Durban.

World Bank Group division director for South Africa, Satu Kahkonen, said extending the support to water and sanitation for the first time would help ensure the benefits of reform reached every household.

“South Africa has shown that sustained reform can turn around even deep-seated infrastructure crises,” she said.