PRETORIA, June 5, 2025 — The World Bank Board of Executive Directors today approved a loan to support critical structural reforms to enhance the efficiency and sustainability of South Africa’s infrastructure services, contributing to inclusive growth and job creation.
The US$1.5 billion operation addresses South Africa’s twin economic challenges of low growth and high unemployment by easing infrastructure constraints in the energy and freight transport sectors, which have severely impacted businesses and households in recent years, disproportionately affecting the most vulnerable.
The Government of South Africa has committed to modernize state-owned enterprises and open the power and freight transport sectors to private sector competition - an effective means to attract new technologies and financing. The loan supports this drive through three mutually reinforcing pillars: improving energy security by attracting investment in transmission, expanding grid access, and enhancing municipal distribution; increasing freight transport efficiency by establishing an independent economic regulator and unbundling state logistics company Transnet; and supporting the transition to a low-carbon economy through fiscal tools and protections for affected communities.
"This loan represents another important milestone in our government's commitment to transforming South Africa's infrastructure into a more efficient, competitive, and sustainable foundation for growth. Our ongoing partnership with the World Bank will assist us to move forward with greater speed on the reforms vital to transforming our infrastructure landscape," said Honorable Enoch Godongwana, Minister of Finance, Republic of South Africa.
The loan is part of the World Bank Group’s broader support for South Africa which centers on inclusive growth by creating jobs and reducing poverty as well as inequality amongst others.
“The World Bank supports these reforms which tackle longstanding bottlenecks and have the potential to create 250 000 jobs by 2027 and about half a million jobs by the early 2030s. They are essential for attracting investment and enhancing public service delivery,” said Satu Kahkonen, World Bank Division Director for South Africa.
The latest operation builds on the South Africa COVID-19 Response Development Policy Loan (approved January 2022) and the South Africa Sustainable and Low-Carbon Energy Transition Development Policy Loan (approved September 2023). Amongst the main results achieved so far is the significant reduction in the frequency and intensity of power cuts nationwide (known as loadshedding). This was achieved through the surge in privately funded renewable energy and the improvements in Eskom's Energy Availability Factor (EAF), which rose to 63 percent in 2024, up from 55 percent in 2023.
Contacts:
National Treasury:
Cleopatra Mosana, +27 63 686 8413, media@treasury.gov.za
World Bank:
In South Africa: Lavinia Engelbrecht, +2773 267-6073, lengelbrecht@worldbankgroup.org
In Washington: Daniella van Leggelo-Padilla, (202) 473-4989, dvanleggelo@worldbank.org
