
South Africa has secured a $1.5 billion loan from the World Bank to address its struggling transportation infrastructure and facilitate a transition to a low-carbon economy, as announced by the country’s National Treasury on Monday.
The loan aims to tackle critical infrastructure bottlenecks, particularly in the energy and freight transportation sectors, which have severely hampered key industries like mining and auto manufacturing.
South Africa has experienced slow economic growth over the past decade due to deteriorating rail systems, jammed ports, and frequent blackouts.
President Cyril Ramaphosa’s coalition government has committed to tackling corruption, improving management, and implementing reforms to boost economic growth and reduce the country’s high unemployment rate.
The government expects the World Bank loan to promote inclusive economic growth and job creation by alleviating these infrastructure constraints.
The National Treasury highlighted that the loan offers favorable terms, including a three-year grace period, which will help reduce the country’s escalating debt-service expenses.
South Africa’s 2025-26 budget has already allocated over R1 trillion (approximately $55.5 billion) over the next three years for critical infrastructure in transportation, energy, water, and sanitation.
Despite these efforts, real gross domestic product (GDP) for 2025 has been revised downward to 1.4% from a previously projected 1.9% due to a worsening global outlook, persistent logistics issues, and higher borrowing costs.
Finance Minister Enoch Godongwana stated that government debt is projected to stabilize at 77.4% of GDP in 2025/26.