South Africa secures $1.5bn World Bank loan to tackle infrastructure gaps

South Africa has signed a $1.5 billion (R24.66 billion) Development Policy Loan Agreement with the World Bank aimed at addressing the country’s infrastructure challenges, the National Treasury said.

What the loan covers

The Treasury said the financing will support reforms and interventions across three main areas: electricity supply, freight transport, and water and sanitation services. The department said these reforms are intended to make it easier for businesses to operate, encourage investment and create jobs.

Job creation and repayment terms

The loan is expected to help create nearly 600 000 jobs. It will be repaid over 15 years, with South Africa receiving a three-year grace period. The interest rate is variable and linked to the United States benchmark Secured Overnight Financing Rate (SOFR), plus an additional 1.35%.

Context and Treasury commentary

National Treasury said this is the fourth Development Policy Loan South Africa has secured from the World Bank as part of the countries’ ongoing partnership. The department noted that concessional loans from institutions such as the World Bank are cheaper to service than loans raised at market rates.

The Treasury said the financing aligns with its borrowing strategy by offering a favourable interest rate and flexible repayment terms, which it said contributes to minimising the rise in debt service costs.

Broader financing and World Bank remarks

According to Treasury, the World Bank loan, together with financing secured from other multilateral development partners, has enabled government to meet its 2026-27 foreign currency borrowing requirement of $3.2 billion.

“[South Africa has] shown sustained reform can turn around even deep-seated infrastructure crises,”

World Bank Group division director for South Africa Satu Kahkonen said the bank is extending support to water and sanitation for the first time under this programme.

“By extending this support to water and sanitation for the first time, we are helping ensure the benefits of reform reach every household, while these efforts together are expected to help create almost 600 000 jobs and attract much-needed private investment.”