The World Bank approved a $1.5 billion loan to South Africa aimed at upgrading its struggling transportation infrastructure and accelerating its transition to a low-carbon economy, the National Treasury announced Monday.
Decades of neglect have left South Africa’s rail systems deteriorating, ports congested, and power supplies unreliable, slowing growth in key sectors like mining and automotive manufacturing.
President Cyril Ramaphosa’s government has vowed to fight corruption, improve management, and implement reforms to revive the nation’s sluggish economy and tackle soaring unemployment.
Though details remain sparse, officials say the loan will help ease critical infrastructure bottlenecks in energy and freight transport, fostering inclusive growth and new jobs.
“This agreement reinforces the strong collaboration between the World Bank and South Africa,” the Treasury said, calling the loan a pivotal step toward addressing economic stagnation and joblessness.
The loan’s favorable terms, including a three-year grace period, are expected to ease South Africa’s rising debt-service costs, the Treasury added.
South Africa’s 2025-26 budget allocates over R1 trillion for vital infrastructure projects in transportation, energy, water, and sanitation, aiming to enhance public services.
However, growth forecasts have been trimmed to 1.4% for 2025 from an earlier 1.9% due to global economic headwinds, logistics challenges, and higher borrowing expenses.
Finance Minister Enoch Godongwana projects government debt will stabilize at 77.4% of GDP in 2025-26.
Meanwhile, cuts in U.S. foreign aid have jeopardized South Africa’s HIV programs, with a $436 million shortfall threatening thousands of healthcare jobs and vital treatment services.
Godongwana said the government lacks funds to cover this gap, deepening pressure on the nation’s health infrastructure.