World Bank Approves $1.5 Billion Loan to Boost South Africa’s Infrastructure

The World Bank has approved a $1.5 billion loan to South Africa aimed at overhauling critical infrastructure and accelerating the country’s shift to a low-carbon, sustainable economy, according to the National Treasury. The funding, announced on Monday, comes at a time when aging transport systems, port congestion, and persistent power outages have severely impacted key industries and slowed economic growth in Africa’s most industrialised nation.

“This agreement reinforces the strong and constructive collaboration between the World Bank and the government of South Africa,” the National Treasury said. “This partnership marks a significant step toward addressing South Africa’s pressing economic challenges of low growth and high unemployment.”

The loan is expected to relieve infrastructure bottlenecks, particularly in the freight and energy sectors, paving the way for inclusive economic growth and job creation. South African President Cyril Ramaphosa and his coalition government have committed to tackling corruption and the mismanagement that has plagued state institutions for decades. The government sees infrastructure reform as a pathway to not only economic recovery but also long-term sustainability.

While the Treasury did not provide detailed project breakdowns, it noted that the loan terms include a three-year grace period, which is more favorable than typical commercial financing and will help ease pressure from rising debt-service costs.

In line with its strategic focus, South Africa’s 2025–2026 national budget allocates over R1 trillion across the next three years toward critical infrastructure investment in transport, energy, water, and sanitation with the broader goal of expanding access to basic services and stimulating employment.

However, the country’s economic outlook remains cautious. The Finance Ministry recently revised its GDP growth forecast for 2025 down to 1.4% from a previous estimate of 1.9%, citing global headwinds, persistent logistics constraints, and rising borrowing costs. Finance Minister Enoch Godongwana stated that government debt is projected to stabilise at 77.4% of GDP by the 2025/26 fiscal year.

The World Bank’s support comes amid broader funding challenges, including a significant shortfall in HIV-related aid. Earlier this year, the dismantling of USAID by the Trump administration led to a loss of approximately $436 million in annual support for HIV treatment and prevention in South Africa, threatening healthcare programs and thousands of associated jobs.

Godongwana acknowledged that the government lacks the funds to fully bridge the gap created by the aid cut, which has put pressure on South Africa’s already strained healthcare system particularly in its efforts to support one of the world’s largest populations of people living with HIV.

The World Bank’s loan is expected to serve as a catalyst for economic reform, with hopes that improved infrastructure, especially in energy and logistics, will restore investor confidence and drive sustainable, long-term growth.