South Africa, World Bank Sign $1.5bn Loan to Support Infrastructure Reforms

Kimberly Mutandiro/GroundUp
Unemployed young men collect coal along the railway lines and sell it for R50 a bag (file photo).
21 July 2026
SAnews.gov.za (Tshwane)

The South African government and the World Bank have signed a US$1.5 billion Development Policy Loan aimed at supporting infrastructure reforms and boosting inclusive economic growth.

The loan, announced by National Treasury on Tuesday, is intended to help address infrastructure constraints that the government identifies as a major barrier to job creation, amid persistent challenges of low economic growth and high unemployment.

The financing will support reforms in the electricity, freight and logistics sectors, as well as efforts to address challenges in water and sanitation.

Treasury said the funding forms part of the government's broader programme of structural reforms in the energy, logistics and water sectors, which it described as critical to laying the foundation for faster and more inclusive growth.

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The fourth development policy loan under the partnership between South Africa and the World Bank is built around three key areas: strengthening energy competitiveness and security, upgrading freight transport services, and improving the delivery of water and sanitation services.

According to Treasury, these reforms are expected to contribute to economic growth and job creation.

The loan is valued at US$1.5 billion and has a 15-year maturity, including a three-year grace period. The interest rate is set at the six-month Secured Overnight Financing Rate (SOFR) plus 1.35%.

Treasury said the financing terms are aligned with the National Treasury's borrowing strategy, which seeks to maintain long-term debt sustainability and affordability by securing funding at the lowest possible cost.

It said the loan's favourable interest rate and flexible repayment terms would help minimise the increase in debt-service costs.

The World Bank loan, together with financing secured from other multilateral development partners, has enabled the government to meet its US$3.2 billion foreign currency borrowing requirement for the 2026/27 financial year, according to Treasury.

National Treasury thanked the World Bank for its continued support, saying the partnership was critical to maintaining momentum on reforms and advancing South Africa's broader development objectives.

Read the original article on SAnews.gov.za.

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