World Bank approves $1.5 billion for South Africa reforms

The financing, provided through the International Bank for Reconstruction and Development (IBRD), marks the fourth stand-alone Development Policy Loan approved for South Africa since 2022.

South Africa has secured a $1.5 billion loan from the World Bank Group to accelerate reforms in electricity, freight transport, water and sanitation, with the programme expected to support nearly 600,000 direct and indirect jobs by 2032 while improving essential infrastructure across the country.

The financing, provided through the International Bank for Reconstruction and Development (IBRD), marks the fourth stand-alone Development Policy Loan approved for South Africa since 2022. It also becomes the first of these programmes to include water and sanitation alongside ongoing reforms in energy and freight transport.

Infrastructure reforms set to drive employment

According to World Bank economic modelling, the reforms are expected to generate widespread employment by reducing infrastructure bottlenecks that have slowed business activity and investment for years. Most of the projected jobs will come from improvements in the electricity and transport sectors, which are expected to support around 280,000 jobs by 2027, increasing to more than 560,000 by 2032 as the reforms take effect across the wider economy.

The programme supports the launch of a competitive wholesale electricity market and encourages greater private investment in electricity transmission, with a target of connecting 300,000 additional households to the power grid by December 2027. Officials said these measures build on recent progress, including the virtual elimination of load shedding over the past 18 months and a sixfold increase in private renewable energy investment.

Transport and water sectors receive fresh momentum

The package also expands reforms in freight transport by opening greater competition for private rail operators and supporting South Africa's first-ever private concession for a port terminal in Durban. Freight volumes moving through the country's railways and ports have already increased by more than 50 percent since 2023, reflecting improvements introduced through earlier reforms.

For the first time, water and sanitation are included in the World Bank-supported reform programme. The measures strengthen regulatory oversight, create opportunities for private water service providers and give the National Water Resources Infrastructure Agency greater independence to invest in major bulk water infrastructure.

Although these reforms are not expected to generate large numbers of jobs directly, they are projected to improve water access, reduce health risks and ease the burden of collecting water for millions of households, especially poorer families and female-headed households.

Government sees reforms as foundation for growth

Finance Minister Enoch Godongwana said the programme reflects the government's commitment to removing infrastructure constraints that have limited economic growth and employment. He noted that expanding reforms into the water sector addresses governance and investment gaps that affect millions of South Africans.

World Bank Group Division Director for South Africa Satu Kahkonen said the country's recent progress demonstrates that sustained reforms can reverse major infrastructure challenges. She added that extending support to water and sanitation will help ensure the benefits of economic reforms reach more households while attracting additional private investment.

The operation was developed in partnership with several international development institutions, including Germany, Japan, the OPEC Fund and the African Development Bank, which continue supporting South Africa's infrastructure modernisation programme.