South Africa has signed a $1.5 billion loan with the World Bank to fund reforms aimed at overhauling its creaking infrastructure and generating hundreds of thousands of jobs, according to africanews.com.

The loan, extended by the International Bank for Reconstruction and Development (IBRD), is the fourth in a series of stand-alone Development Policy Loans to South Africa since 2022. It targets chronic bottlenecks in electricity supply, freight transport, and water and sanitation services that have long dragged on economic growth.

The National Treasury said the loan comes with a favourable interest rate and flexible repayment terms, which help minimise any rise in debt servicing costs. Combined with financing from other multilateral lenders, the loan allows the government to meet its 2026/27 foreign currency borrowing requirement of $3.2 billion.

The World Bank estimates the programme could enable nearly 600,000 jobs, mostly from improvements in electricity generation and freight transport. Persistent power shortages, congested ports and rail networks, and deteriorating municipal water infrastructure have constrained mining, manufacturing, and exports.

South Africa’s economy has been held back by years of underinvestment in state-owned enterprises like Eskom and Transnet. Rolling blackouts and port logjams have hurt investor confidence and slowed growth. The new loan supports a broader reform push by the government to remove infrastructure bottlenecks, improve service delivery, and stimulate private investment.

The Treasury emphasised that the loan’s terms are designed to keep debt costs manageable. ‘The favourable interest rate and flexible repayment terms contribute to minimising an increase in debt servicing costs,’ it said in a statement.

This is the fourth such loan from the World Bank since 2022, signalling a sustained partnership between Pretoria and the multilateral lender. The funds are part of a coordinated effort with other development banks to support South Africa’s infrastructure modernisation.

Critics, however, have questioned the country’s growing reliance on external borrowing. Some analysts argue that without deeper structural reforms, loans alone may not fix the underlying inefficiencies in state-owned enterprises. The government counters that the loan is a necessary bridge to unlock private investment and long-term growth.

The infrastructure overhaul is central to the government’s economic recovery plan. By targeting electricity, freight, and water, the reforms aim to lower costs for businesses, improve export competitiveness, and create jobs in a country with one of the highest unemployment rates in the world.

The World Bank said the programme could help enable nearly 600,000 jobs, with most expected to come from improvements in electricity generation and freight transport. This would be a significant boost for an economy that has struggled to generate sufficient employment.

As South Africa moves ahead with the loan, all eyes will be on implementation. The success of the reforms will depend on how effectively the funds are deployed and whether the government can tackle entrenched problems in state-owned enterprises.