South Africa unlocks $1.5bln World Bank loan to tackle infrastructure bottlenecks and attract private investment

Zawya

2 days ago

South Africa's Treasury is ramping up efforts to attract private-sector investment into infrastructure, supported by concessional loans from global development institutions.
The latest $1.5bn loan from the World Bank will help unblock critical energy and freight infrastructure bottlenecks, while new financing tools—such as a credit guarantee vehicle—aim to leverage billions in private capital for national transmission upgrades.
The loan agreement, finalised in June, is part of a wider national drive to modernise infrastructure, revitalise state institutions, and improve delivery in core economic sectors.
Treasury confirmed the funds would be used for general budget support, in line with a financing strategy that favours cost-effective funding structures and extended repayment timelines. By securing below-market rates, the government aims to stabilise borrowing costs while enabling targeted capital investment.
Energy, logistics, transition
At the heart of the World Bank facility are three infrastructure-focused reform areas: stabilising the energy supply, streamlining freight logistics, and accelerating South Africa's transition to cleaner energy systems. These areas are considered essential to improving the business environment, encouraging investor confidence, and creating the foundation for inclusive economic growth.
The World Bank described the loan as a vehicle to support deeper structural change across public infrastructure services. It said the funding would address persistent operational backlogs in energy and transport, which have stifled productivity, disrupted trade routes, and strained vulnerable communities.
In addition to the World Bank loan, the South African government is negotiating further funding from the French Development Agency (AFD) and the New Development Bank (NDB), potentially raising an additional $1.5bn in concessional loans. Altogether, these multilateral contributions could provide as much as $3bn of the nearly R130bn in external borrowing outlined in the latest budget to meet medium-term fiscal needs.
Duncan Pieterse, director-general of the National Treasury, noted that these types of loans offer significantly better terms than commercial borrowing, reducing pressure on debt servicing while supporting long-term infrastructure improvements. In the past five years alone, South Africa has accessed over $1.2bn from global lenders offering concessional funding arrangements.
One of the most forward-looking developments is the government's plan to launch a credit guarantee facility in partnership with the World Bank. The initiative is designed to de-risk infrastructure projects and draw in private capital, starting with South Africa's independent transmission build programme.
This is expected to help accelerate the country's transmission grid expansion—seen as vital to integrating more renewable energy producers and alleviating power shortages.
According to Reuters, the World Bank is considering an initial $500m commitment to support the guarantee vehicle. The broader plan includes constructing 14,500km of new transmission lines and expanding transformer capacity over the next decade, at an estimated cost of $25bn.
The NDB has also signalled strong alignment with South Africa's infrastructure roadmap. In addition to three previous $1bn loans since 2020, it has recently approved another $1bn for national water projects and extended R5bn in direct financing to Transnet.
Taken together, these funding streams reflect a co-ordinated shift towards infrastructure-led growth, underpinned by structural reform and stronger collaboration with private-sector players. With momentum building across energy, logistics, and water infrastructure, South Africa appears to be laying the groundwork for a more resilient and investable economic future.
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