logo
Africa's Infrastructure Boost: AfDB Commits $475m to South Africa

Africa's Infrastructure Boost: AfDB Commits $475m to South Africa

Arabian Post02-07-2025
South Africa will receive a $474.6 million loan from the African Development Bank to overhaul its transport systems and energy infrastructure, the Bank announced on Tuesday. The financing, part of a broader international development package, aims to tackle persistent power outages, outdated rail networks and port congestion that have hampered economic performance.
The loan is being deployed under the Infrastructure Governance and Green Growth Programme, the Bank's second phase in support of South Africa's just energy transition. It builds on a previous $300 million initiative approved in 2023, which focused on energy governance and climate resilience.
The funding structure incorporates three strategic pillars: restructuring the power sector to bolster energy security, advancing the shift to a low-carbon economy, and enhancing transport efficiency—particularly through rail reforms. It also supports green industrialisation and lays the groundwork for electric vehicle manufacturing and green hydrogen production.
ADVERTISEMENT
Finance Minister Enoch Godongwana described the loan as pivotal. 'Our country faces the significant challenge of energy shortages, leading to loadshedding, as well as significant transport bottlenecks,' he said. 'With [AfDB's] partnership, our government has committed itself to stay the course and implement these critical reforms…while endeavouring to achieve our international commitments on climate change and our JET objectives.'
This funding arrives as part of a coordinated international financing package. Alongside the AfDB loan, South Africa secured a $1.5 billion World Bank loan the previous month. Contributions also include €500 million from Germany's KfW, up to $200 million from the Japan International Cooperation Agency, and $150 million from the OPEC Fund for International Development.
For over a decade, South Africa's economy has been constrained by electricity reliability issues, crumbling rail infrastructure and congested ports—challenges that have negatively impacted its mining and automotive sectors. The country's status as the continent's most industrialised economy amplifies the effects of such structural bottlenecks.
The AfDB has emphasised that reforms will include energy-efficiency initiatives and rail restructuring, such as vertical separation of rail operations and improved investment frameworks. A grant component within the package supports energy efficiency and targeted reforms in the rail sector.
Kennedy Mbekeani, Southern Africa's Director‑General for the Bank, said the programme is 'more than financing—it's a blueprint for Africa's energy future,' noting that South Africa's leadership in the green transition could serve as a model for other nations.
Macro-economic projections suggest the just energy transition could lift GDP growth by between 0.2 and 0.4 percentage points annually between 2025 and 2030, according to the International Monetary Fund.
The initiative is embedded in a comprehensive social and environmental framework. Women and youth empowerment are core to its social employment fund, with 70 percent of beneficiaries earmarked for women. Dedicated youth training programmes aim to build skills aligned with green industries.
Governance reforms and green job initiatives, including skills development in renewable energy sectors, are designed to stimulate local employment and support small business involvement—especially for women-led enterprises and youth entrepreneurs.
The broader global context highlights the strategic nature of this support: South Africa currently holds the G20 presidency, and its updated Nationally Determined Contributions under the Paris Agreement aim for emissions of 398–510 million tons CO₂ equivalent by 2025, reducing further to 350–420 million tons by 2030.
By backing the Green Growth Programme, the AfDB and international partners are reinforcing the country's commitments across multiple United Nations Sustainable Development Goals—especially SDG 7, SDG 8, SDG 9, and SDG 13.
With this tranche, total coordinated financing now reaches $2.78 billion, underscoring an intensifying global commitment to South Africa's structural economic transformation. Should the reforms in energy and transport succeed, the country could see stronger growth, reduced emissions and enhanced regional trade integration across the Southern African Development Community.
Despite the promise, successful delivery remains contingent on effective implementation. Structural challenges—such as Eskom's ability to manage grid stability, avoid load‑shedding and coordinate with private sector renewable developments—will be critical. Equally, rail reforms must overcome years of underinvestment and institutional inertia within state-owned entities.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Boosting Growth with Inclusive Financial Development Crucial to Unlock Angola's Poverty Alleviation Efforts
Boosting Growth with Inclusive Financial Development Crucial to Unlock Angola's Poverty Alleviation Efforts

Zawya

time19 hours ago

  • Zawya

Boosting Growth with Inclusive Financial Development Crucial to Unlock Angola's Poverty Alleviation Efforts

Angola recorded the highest economic expansion since 2014, with real Gross Domestic Product (GDP) growth reaching 4.4% in 2024. According to the latest edition of the Angola Economic Update (AEU) published by the World Bank Group (WBG) today, titled Boosting Growth with Inclusive Financial Development, this growth was driven by the oil sector's recovery and diamond extraction, along with strong expansion in commerce and fishing. The report highlights that despite a rebound in economic activity in 2024, Angola still struggles with the lasting impacts of prolonged stagnation. From 2016 to 2020, the economy contracted by approximately 10.4%, averaging a 2.1% annual decline. This sluggish growth stemmed from structural challenges and heavy dependence on the oil sector, making it susceptible to global price fluctuations. Real GDP growth is projected at an average of 2.9% from 2025 to 2027, but this is unlikely to significantly improve living standards. Increased global uncertainty, including falling oil prices, emphasizes the need for Angola to diversify its economy and reduce reliance on oil. 'The Angolan economy is in urgent need of establishing a consistent pathway toward robust growth to address nearly a decade of stagnation and to improve conditions for poverty alleviation. There is optimism that the comprehensive economic reforms currently being implemented by the government will produce positive outcomes and unlock the country's potential,' said Juan Carlos Alvarez, World Bank Country Manager for Angola. 'The country must intensify its support for key sectors that can significantly contribute to the essential process of economic diversification. A deeper analysis of these sectors and the needed structural reforms are discussed in the Angola Country Economic Memorandum, also published today,' he added. The AEU emphasizes the importance of promoting inclusive financial development in Angola to address the existing significant inequality and exclusion, particularly in rural areas where access to formal banking services is limited. Women and older adults are particularly affected. Compared to other countries in the region, Angolan households have less access to credit, savings, and digital financial services. Advancing financial inclusion can boost economic participation and resilience, leading to sustainable growth and poverty reduction. Access to banking, credit, and insurance empowers small businesses, farmers, and entrepreneurs, enhancing productivity and job creation. Moreover, financial inclusion can reduce income inequality by providing marginalized groups with opportunities to build assets and improve their well-being. The report highlights that implementing key reforms can create a more robust and inclusive financial sector in Angola, essential for diversifying the economy and fostering growth and job creation. It emphasizes the need for broader access to financial services beyond Luanda, especially as Angola focuses on economic activities in the Lobito Corridor and develops secondary cities. Additionally, the rise of digital banking and mobile payments offers a significant opportunity to reach underserved populations, enhancing economic resilience and promoting inclusive development. The report outlines essential reforms that Angola can implement to foster the growth of its financial sector and enhance accessibility in an inclusive manner. These reforms include: Developing digital payments to expand access to financial services in remote areas. Making digital payments more accessible and intuitive. Establishing a favorable regulatory framework to increase access to finance for Microcredit and Small and Medium Enterprises (MSME). Promoting lending to MSMEs and improving the transparency and market alignment of initiatives to finance MSMEs. Implementing the Financial Action Task Force action plan and addressing deficiencies in the Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) Framework. Increasing access to insurance for individuals and MSMEs, including weather-based-index insurance for agricultural activities. 'While addressing financial inclusion in Angola has several challenges, particularly for low-income and rural communities, there are constructive opportunities to address these barriers. By implementing regulatory reforms, embracing digital innovations, and enhancing financial education, Angola can pave the way for a more diverse economy and unlock new avenues for growth and job creation,' said Benedicte Baduel, World Bank Senior Country Economist for Angola. Distributed by APO Group on behalf of The World Bank Group.

The Gambia: African Development Fund Approves $19.93 Million Grant to Tackle Fragility and Expand Opportunities for Rural Youth and Women
The Gambia: African Development Fund Approves $19.93 Million Grant to Tackle Fragility and Expand Opportunities for Rural Youth and Women

Zawya

timea day ago

  • Zawya

The Gambia: African Development Fund Approves $19.93 Million Grant to Tackle Fragility and Expand Opportunities for Rural Youth and Women

The Board of Directors of the African Development Bank Group ( has approved $19.93 million grant funding for the Resilience Building - Vulnerable Youth and Women Support Project, designed to improve access to basic social services for underserved communities in The Gambia. The initiative seeks to address the root causes of poverty and irregular migration by creating sustainable livelihoods and tackling early signs of fragility and preventing structural drivers of conflict and instability in the targeted region. It forms part of the Bank's scaled-up prevention agenda under the Prevention Envelope of the Transition Support Facility (TSF), which emphasizes early response to fragility risks and systematic drivers of conflict. The Gambia faces severe economic challenges, with 53.4% of the population living below the poverty line. Poverty is particularly severe in rural areas, affecting 76 percent of residents, compared to 34 percent in urban areas. Youth unemployment stands at 38.6%, with women disproportionately impacted -- 1.3 unemployed women for every unemployed man. These socio-economic disparities, coupled with limited access to services, are major push factors fuelling irregular migration and social instability. Although the country has achieved robust electricity access nationwide, glaring regional inequalities persist. In areas such as Kuntaur and Janjanbureh, fewer than one in four people have access to electricity, compared to 95 percent in the capital. Additionally, one in four children suffers from malnutrition. By targeting these gaps, the project aims to renew the social contract and foster community resilience. 'This project represents our commitment to tackling the foundational causes of fragility, poverty, exclusion, and lack of opportunity, by investing in people and systems that build community resilience and hope,' said Dr. Joseph Ribeiro, African Development Bank Deputy Director General for West Africa, and Country Manager for The Gambia. 'Through the TSF Prevention Envelope, we are acting early to prevent conflict and youth migration by fostering inclusive growth, gender equality, and institutional stability, while building foundations for sustainable livelihoods that will keep families and communities together.' The project will directly create 1,500 jobs, enhance productivity for 5,000 existing positions, and provide annual skills training to 500 youth in high-demand sectors such as agriculture, engineering, ICT, and renewable energy. In addition, support will be extended to 500 women-led micro and small enterprises and 50 women's cooperatives. Key investments in health infrastructure will include rehabilitating four primary health facilities vulnerable regions, including Basse, Kuntaur, and Janjanbureh, where maternal mortality and child malnutrition rates exceed national averages. Enhanced nutrition surveillance systems will enable early detection for 22,000 children and facilitate treatment for 1,000 children requiring specialized care. Food insecurity has surged, rising from 13.4 percent in 2021 to 29 percent in 2023, with peaks of 61 percent in areas such as Kuntaur. The project will address this crisis by promoting climate-smart agriculture and strengthening local values chains to improve food security and reduce vulnerability to climate shocks. Financial inclusion is a core pillar of the intervention. With 77 percent of Gambian youth currently excluded from formal financial services, the project will establish dedicated credit lines and provide business development support to unlock entrepreneurship, particularly for women who face systemic barriers to accessing capital and markets. The initiative also includes scaling up efforts to tackle gender-based violence and inequality, and capacity-building for government institutions to enhance data-driven policymaking and long-term monitoring of fragility trends. Civil society organisations, including the Association of Non-Governmental Organizations (TANGO), will be central to ensuring the project is inclusive, participatory, and aligned with national priorities. Distributed by APO Group on behalf of African Development Bank Group (AfDB). Media Contact: Natalie Nkembuh, Communication and Media Relations Department media@

Benin: African Development Bank Approves Over $30 Million to Protect Farmers from Climate Shocks and Food Insecurity
Benin: African Development Bank Approves Over $30 Million to Protect Farmers from Climate Shocks and Food Insecurity

Zawya

timea day ago

  • Zawya

Benin: African Development Bank Approves Over $30 Million to Protect Farmers from Climate Shocks and Food Insecurity

The Board of Directors of the African Development Bank Group ( has approved $30.25 million in financing for a groundbreaking climate protection and agricultural sector resilience program in Benin. Thanks to this approval, Beninese farmers, particularly those in northern Benin, will no longer have to fear losing their entire harvest during devastating droughts or sudden floods. This initiative will protect 150,000 smallholder farmers against climate shocks in a country where agriculture employs seven out of ten people but remains at the mercy of an increasingly unpredictable climate. The situation is particularly critical in the departments of Alibori and Atakora, where one in four farmers suffers from food insecurity, well above the national average. These northern regions face a double burden of climate challenges and spillover effects from Sahel instability, creating additional pressures through forced displacement and border closures with Niger. Climate projections indicate alarming future risks, with cotton production and maize yields expected to drop by 22% and 6.3% respectively, with potential economic losses estimated at approximately 201 billion CFA francs. "This investment represents our commitment to strengthening climate resilience in Benin's agricultural sector while responding to the urgent needs of vulnerable farming communities," said Robert Masumbuko, African Development Bank Country Representative in Benin. "By introducing innovative risk management tools and strengthening local capacities, we are helping farmers adapt to climate change while preventing conflicts and promoting social cohesion in fragile border areas." The project strengthens the Beninese government's efforts to establish agricultural insurance, whose pilot phase is managed by Benin's National Fund for Agricultural Development (FNDA). It introduces innovative climate risk transfer mechanisms, including sovereign insurance coverage against droughts and floods via the African Risk Capacity, and agricultural micro- insurance for smallholders. These tools will improve farmers' risk profiles with financial institutions, facilitating better access to credit and investment opportunities. Beyond insurance mechanisms, the initiative will strengthen institutional capacities for climate disaster management, deploy early warning systems with agrometeorological equipment, and promote climate-smart agricultural practices. The program specifically targets 30% youth participation and ensures 30% female representation among the 150,000 direct beneficiaries. Furthermore, special attention is given to social cohesion activities to support peaceful integration of displaced populations in host communities. The financing comes from multiple sources: $20 million from the "prevention" envelope of the Transition Support Facility, $5 million from the African Development Fund, $3 million from the ADRiFi multi-donor trust fund, and approximately $2.44 million in national counterpart contributions for insurance premiums. The project aligns with Benin's National Development Plan 2018-2025 and its National Adaptation Plan 2022-2027, supporting the country's agricultural transformation objectives while strengthening climate change resilience through innovative instruments such as insurance. Strategic partnerships with the World Food Programme, the World Bank, and bilateral donors such as Swiss and Luxembourg cooperations ensure comprehensive support for sustainable agricultural development, including the establishment of agricultural insurance in Benin. For Benin's farming families, this financing represents hope for protected harvests, stable incomes, and a safer future for their children. For northern Benin communities, this project is a guarantee of stability and social cohesion in a strategic region of West Africa, and finally, for the Beninese state, the project ensures financial resilience against increasingly recurrent disaster risks. The African Development Bank Group remains committed to supporting Africa's agricultural transformation through innovative climate adaptation solutions that protect vulnerable communities while promoting sustainable development and regional stability. Distributed by APO Group on behalf of African Development Bank Group (AfDB). Media Contact: Natalie Nkembuh Communication and External Relations Department media@ About the African Development Bank Group: The African Development Bank Group is Africa's leading development finance institution. It comprises three distinct entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). Represented in 41 African countries, with an external office in Japan, the Bank contributes to the economic development and social progress of its 54 regional member countries. For more information:

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store