World Bank grants South Africa a $1.5B loan for infrastructure upgrade and green energy transition
JOHANNESBURG — JOHANNESBURG (AP) — The World Bank approved a $1.5 billion loan to South Africa to upgrade its transportation infrastructure and support the country’s shift towards a low-carbon economy, the National Treasury announced on Monday.
South Africa has been facing challenges with deteriorating rail systems, congested ports, and frequent power outages, which have negatively impacted key industries such as mining and automotive manufacturing, leading to sluggish economic growth in the region over the past decade.
President Cyril Ramaphosa and his government have committed to addressing corruption, improving governance, and implementing reforms to revive the economy and reduce the country’s high unemployment rate.
The loan from the World Bank is expected to support inclusive economic growth and job creation by addressing critical infrastructure bottlenecks, particularly in the energy and freight transportation sectors, according to the South African government.
The National Treasury stated, “This partnership signifies a significant milestone in addressing South Africa’s economic challenges and high unemployment rates.”
The loan terms, including a three-year grace period, are more favorable than traditional borrowing, which is expected to lower debt-servicing costs for the country.
South Africa has allocated over R1 trillion in its 2025-26 budget for essential infrastructure projects in transportation, energy, water, and sanitation to improve access to basic services.
However, due to global economic uncertainties, logistics challenges, and higher borrowing costs, the Finance Ministry revised the country’s GDP growth forecast downward to 1.4% for 2025.
Finance Minister Enoch Godongwana projected that government debt would stabilize at 77.4% of GDP by 2025/26.
Earlier this year, the Trump administration’s decision to cut funding to South Africa through USAID resulted in a significant shortfall for HIV treatment and prevention programs, putting thousands of healthcare jobs at risk.
Godongwana acknowledged the funding gap caused by the aid cuts and emphasized the challenges faced in maintaining support for the country’s HIV-positive population.
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