Africa’s richest country secures $1.5 billion World Bank infrastructure loan

The World Bank has approved a $1.5 billion loan to support South Africa’s structural reforms, focusing on improving infrastructure and reviving economic growth.

The Washington-based lender said the funding aims to tackle key challenges such as sluggish growth and high unemployment by easing bottlenecks in the country’s energy and freight transport sectors, according to Bloomberg.

South Africa has pledged to modernize its state-owned enterprises and open critical industries to competition.

President Cyril Ramaphosa, speaking last month about his government’s infrastructure drive, emphasized its importance to South Africa’s future.

“Infrastructure is the flywheel that our economy needs to boost growth and to create jobs. Infrastructure that is well constructed and maintained encourages investors to see our country as a great investment destination.”

The World Bank said its support will enhance energy security, improve freight logistics, and aid the country’s transition to a low-carbon economy.

The loan will provide funding for state-owned Eskom Holdings SOC Ltd. to strengthen the electricity grid and support renewable energy integration. It will also assist Transnet SOC Ltd., the country’s port and rail operator, expand its freight transport capacity.

South Africa has been paying increased attention to its infrastructure in recent years. Decades of underinvestment and poor management have created a significant infrastructure gap in the continent’s most advanced economy. Even affluent communities are feeling the strain.

Business Insider Africa earlier reported that, Johannesburg, often regarded as Africa’s wealthiest city due to its high concentration of businesses and millionaires, needs an estimated 221 billion rand ($12 billion) to fix its infrastructure challenges.

In March, South Africa, in partnership with the World Bank, launched a $3 billion initiative to restore essential services and improve infrastructure in eight of its largest cities.

Last month, South African President Cyril Ramaphosa said his plan to boost the economy by launching major construction projects has attracted a record 238 billion rand (about $13.3 billion) in investment.