- The World Bank Board of Executive Directors today approved the Infrastructure Modernization for South Africa Development Policy Loan which will support critical structural reforms to enhance the efficiency and sustainability of South Africa’s infrastructure services, contributing to inclusive growth and job creation.
The $1.5 billion operation addresses South Africa’s twin economic challenges of low growth and high unemployment by easing infrastructure constraints in the energy and freight transport sectors, which have severely impacted businesses and households in recent years, disproportionately affecting the most vulnerable.
The Government of South Africa has committed to modernise state-owned enterprises and open the power and freight transport sectors to private sector competition – an effective means to attract new technologies and financing. The loan supports this drive through three mutually reinforcing pillars: improving energy security by:
- attracting investment in transmission, expanding grid access, and enhancing municipal distribution;
- increasing freight transport efficiency by establishing an independent economic regulator and unbundling state logistics company Transnet;
- and supporting the transition to a low-carbon economy through fiscal tools and protections for affected communities.
“This loan represents another important milestone in our government’s commitment to transforming South Africa’s infrastructure into a more efficient, competitive, and sustainable foundation for growth. Our ongoing partnership with the World Bank will assist us to move forward with greater speed on the reforms vital to transforming our infrastructure landscape,” said Honorable Enoch Godongwana, Minister of Finance, Republic of South Africa.
The loan is part of the World Bank Group’s broader support for South Africa which centers on inclusive growth by creating jobs and reducing poverty as well as inequality amongst others.
“The World Bank supports these reforms which tackle longstanding bottlenecks and have the potential to create 250 000 jobs by 2027 and about half a million jobs by the early 2030s. They are essential for attracting investment and enhancing public service delivery,” said Satu Kahkonen, World Bank Division Director for South Africa.
Author: Bryan Groenendaal
