By Thebe Mabanga
South Africa has secured a US$150 million, or about R2.5 billion, development policy loan from the OPEC Fund for International Development to support its economic reform programme, the National Treasury has announced.
“The Government of South Africa and the OPEC Fund for International Development (OPEC Fund) have signed a US$150 million development policy loan agreement aimed at supporting critical structural reforms to improve the efficiency, resilience, and sustainability of the country’s infrastructure services,” Treasury said in a statement.
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“This marks the first loan agreement between the Government of South Africa and the OPEC Fund and represents an important partnership in addressing South Africa’s pressing economic challenges of low growth and high unemployment.”
Government said the loan will support its ongoing reform programme, driven mainly through Operation Vulindlela, aimed at unlocking infrastructure bottlenecks, particularly in the energy and freight transport sectors.
The statement did not name specific projects to be funded, but said the loan would support policy reforms to improve infrastructure services.
South Africa needs to build more than 14,000 km of new transmission lines over the next decade, while the Renewable Energy Independent Power Producer Procurement Programme is in its seventh bid window after being launched more than a decade ago.
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In freight and logistics, government has opened the country’s railway network to third-party operators, while a concession agreement has been signed with a private port operator for Durban Container Terminal Pier 2.
The loan is for a six-year period with a two-year grace period. It is priced at six-month Secured Overnight Financing Rate, the now widely used benchmark, plus 1.25 percentage points.
This is not the only part of the reforms that is debt financed.
Government has secured a US$925 million, or about R15.3 billion, loan from the World Bank and is in talks with France for a €100 million, or about R2 billion, loan to fund the Metro Trading Services programme, a key part of local government reform.
