- South Africa signed a $1.5 billion World Bank loan to upgrade its power and transport infrastructure, easing blackouts and supply chain bottlenecks.
- The 16-year loan offers favourable terms to reduce debt service costs and support growth, as Eskom and Transnet face operational challenges.
South Africa has signed a $1.5 billion loan agreement with the World Bank to strengthen its ailing energy and transport infrastructure.
The funding aims to tackle critical bottlenecks that have stifled Africa’s most industrialised economy. Persistent power outages and collapsing logistics networks have hampered growth for over a decade.
“The loan will support government efforts to improve energy security and transport efficiency,” the Treasury said, though it did not outline specific projects the funds will support.
The 16-year loan, priced at the six-month Secured Overnight Financing Rate (SOFR) plus 1.49%, includes a three-year grace period. Treasury officials said the concessional terms will help reduce South Africa’s debt-service burden compared to more expensive commercial borrowing.
For years, state-owned utilities Eskom and Transnet have struggled with operational and financial crises, holding back key mining and automotive manufacturing sectors. Economic growth has stalled, with GDP expanding just 0.1% in the first quarter of 2025.
The new loan comes alongside a separate $500 million financing package that the World Bank is evaluating to unlock private investment in South Africa’s power transmission network, which needs expansion to accommodate renewable energy projects.
Finance Minister Enoch Godongwana’s February budget earmarked over 1 trillion rand ($55.5 billion) in infrastructure investments, spanning transport, energy, water, and sanitation. The plan aims to boost productivity, improve public services, and support long-term economic growth.
The government expects public debt to peak at 77.4% of GDP this fiscal year, with a gradual decline projected in subsequent years.