The new $1.5-billion loan from International Bank for Reconstruction and Development (IBRD) to South Africa, the fourth stand-alone Development Policy Loan to the country since 2022, aims to support reforms in the country’s water and sanitation sectors, alongside supporting continued reforms in electricity and freight transport.

Water and sanitation reforms are not expected to directly create large numbers of jobs, as major users such as agriculture and mining already rely on alternative sources, but they are projected to bring concrete improvements for millions of households, including less time spent collecting water, lower health risks and better access for the poorest female-headed households, global finance institution the World Bank Group says.

In water and sanitation, the programme strengthens regulatory oversight, opens the door to private water service providers, and gives the newly established National Water Resources Infrastructure Agency greater autonomy to invest in bulk water infrastructure.

Additional key reforms supported by the operation include the launch of a competitive wholesale electricity market and scaled-up private investment in transmission, with a target of 300 000 new household electricity connections by December 2027.

In freight transport, the programme supports competition among private rail operators and the country's first-ever port terminal concession in Durban.

Policy reforms will improve management efficiency and scale up private investment in rail, ports and energy infrastructure, lower business costs and support additional investment and employment in other sectors, the World Bank Group says.

“This programme reflects our government's determination to remove the infrastructure constraints that have held back growth and job creation for too long,” says Finance Minister Enoch Godongwana.

“Working with the World Bank Group, we are deepening reforms already delivering results in energy and transport, while for the first time tackling the governance and investment gaps in our water sector that affect millions of households, particularly the poorest,” he adds.

The reforms supported by the new financing are expected to help create the equivalent of almost 600 000 more and better-paid jobs by 2032, the group adds.

This is based on economic modelling by the World Bank Group that aims to show how the reforms ripple through the broader economy.

Most of the nearly 600 000 projected jobs impact will come from the reforms in the electricity and transport sectors which together are expected to support the equivalent of around 280 000 jobs by 2027, rising to more than 560 000 by 2032.

The operation builds on reforms that are already showing results, with loadshedding virtually eliminated for a year and a half, private investment in renewable energy increasing sixfold, and rail and port freight volumes rising by more than 50% since 2023.

“South Africa has shown that sustained reform can turn around even deep-seated infrastructure crises,” says World Bank Group Division Director for South Africa Satu Kahkonen.

“By extending this support to water and sanitation for the first time, we are helping ensure the benefits of reform reach every household, while these efforts together are expected to help create almost 600 000 jobs and attract much-needed private investment.”

Meanwhile, the operation was prepared in coordination with development partners active in South Africa's infrastructure sector, including Germany, Japan, the Organisation of the Petroleum Exporting Countries Fund and development finance institution the African Development Bank.