South Africa Secures $1.5 Billion World Bank Loan to Tackle Power Crisis and Transport Challenges

South Africa has secured a $1.5 billion loan from the World Bank equivalent to around R26 billion to support urgent upgrades in its energy and transport infrastructure. The funding is expected to play a crucial role in strengthening the country’s electricity grid through Eskom and boosting freight logistics via Transnet, while also accelerating the shift toward cleaner, renewable energy sources.

The World Bank confirmed the approval of the development policy loan in a statement, saying it aims to support key structural reforms that will help address South Africa’s persistent challenges of sluggish economic growth and high unemployment, currently estimated at nearly 33 percent. Years of power supply instability and freight transport bottlenecks have weighed heavily on the economy, curbing productivity and investor confidence.

Finance Minister Enoch Godongwana welcomed the financial backing, describing the move as a vital step toward modernizing national infrastructure and fast-tracking much-needed reforms. He noted that South Africa’s ongoing partnership with the World Bank enables the country to advance efforts to create a more reliable power system and efficient transport networks.

The loan will allow Eskom, the state-owned power utility, to upgrade its grid infrastructure in preparation for additional renewable energy generation. This comes as South Africa moves toward a more competitive electricity market, breaking away from Eskom’s historical monopoly and opening the sector to private participation. According to a World Bank fact sheet, the government is targeting the addition of 3,500 megawatts of renewable capacity by March 2027, with the potential for more than 200 kilometers of new transmission lines to be built in support of this goal.

Funds will also be allocated to Transnet, the country’s rail and port authority, to help increase its freight capacity. The reforms are expected to improve rail performance and allow greater private sector involvement in freight operations. This is seen as a critical step in unblocking inefficiencies that have stifled the movement of goods and disrupted supply chains in recent years.

The World Bank stated that South Africa’s macroeconomic framework is sound enough to support the operation, with the government demonstrating a strong commitment to fiscal responsibility and structural reform. Officials believe that the reforms backed by this loan will not only improve infrastructure and service delivery but also stimulate long-term economic growth and job creation.