The government is preparing to unlock billions of rand in its infrastructure programme after the World Bank approved a new credit guarantee mechanism aimed at drawing private capital into the county’s strained electricity, logistics and water systems.
The World Bank’s board of executive directors has approved the South Africa Blended Finance Platform for Resilient Infrastructure Programme, which will establish a credit guarantee vehicle (CGV) designed to reduce investor risk and scale up funding for infrastructure projects.
Over the next decade, the initiative is expected to mobilise about $10bn (roughly R160bn) in investment from private investors, commercial lenders and institutional investors.
The programme is projected to generate about 997,000 direct and indirect jobs while contributing to lower greenhouse gas emissions through investment in cleaner infrastructure.
It will be implemented by National Treasury and includes $350m in financing from the International Bank for Reconstruction and Development (IBRD) to capitalise the CGV through the government of South Africa and support project pipeline development and implementation capacity.
The mechanism comes as South Africa struggles to accelerate economic growth and tackle persistent unemployment. The economy has expanded at an average rate of less than 1% over the past decade, while joblessness remains above 30%, with young people disproportionately affected.
Infrastructure bottlenecks in electricity supply, freight logistics and water systems have been a key constraint on economic activity, raising costs for businesses and limiting the expansion of firms and employment.
“The CGV, which will support massive investments in transmission infrastructure, will be incorporated as a company in the coming months,” said finance minister Enoch Godongwana. “Next we expect development partners to confirm their capital participation. We are targeting the CGV to be operational later this year.”
Satu Kahkonen, World Bank division director for South Africa, said: “Investment in infrastructure is central to South Africa’s efforts to restore growth and create jobs.
“This operation supports the government’s agenda by helping mobilise private investment for infrastructure that improves services, strengthens competitiveness and expands economic opportunity.”
The programme complements South Africa’s broader reform agenda under Operation Vulindlela phase 3, which aims to remove regulatory barriers and unlock investment in network industries including electricity, transport and water.
Business Day
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