World Bank grants South Africa R26 Billion loan to boost infrastructure and jobs

by Kelebogile Matlou

The World Bank approved a $1.5 billion (R26 billion) loan for South Africa to help with structural changes aimed at renewing infrastructure and strengthening the economy. The money is in response to the country’s economic woes, including slowing economic expansion and a nearly 33% unemployment rate.

The financing will primarily target the energy and freight transportation sectors, which have been major impediments to economic growth. Frequent power outages due to failing power generation have hindered expansion, while inefficiencies in freight movement continue to impede trade and logistics.

image: Internet

As part of the plan, state-owned power provider Eskom will receive assistance in strengthening the electricity grid and increasing renewable energy capacity. The purpose is to assist South Africa in adding 3,500 megawatts of renewable power by March 2027, as well as developing 200 kilometers of new transmission lines, thereby boosting private sector engagement in the energy market.

The financing will also assist Transnet, the state-owned rail and port corporation, by increasing freight transport capacity and allowing private operators to enter the market. These enhancements are expected to increase economic efficiency and decrease logistics bottlenecks.

Finance Minister Enoch Godongwana welcomed the funding, calling it a vital step in fast-tracking critical reforms. “Our ongoing partnership with the World Bank will assist us to move forward with greater speed on the reforms vital to transforming our infrastructure landscape,” he said.

The World Bank stated that South Africa’s macroeconomic framework is adequate for this support and praised the government’s continued commitment to fiscal responsibility and structural reforms.