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The World Bank Approves a $1 Billion Loan to aid South Africa’s Energy Sector

On October 25, the World Bank announced that it has approved a $1 billion loan to South Africa to help revitalize and improve its energy sector. South Africa has been a victim of recurring power shortages that plague its everyday functioning and hinder its economic activities. This loan is expected to mitigate this difficulty and foster economic growth. The much needed intervention by the World Bank underscores its ongoing efforts to promote sustainability and progress in South Africa. Furthermore, it is also meant to bolster the region’s effort to restructure Eskom, the country’s primary energy provider, and encourage a low carbon economy.

Challenges of Eskom:

Eskom has been struggling with several operational challenges owing to its coal-fired power stations. The power outages ensuing, as a result of the same, are for as long as 10 hours per day. Moreover, several power stations have fallen short of meeting the government emission standards, making them a risk to environmental wellbeing. According to a Reuters analysis, these power plants have been pushing their age-old facilities to their limits resulting in a mass emission of particulate matter- mainly soot and  ash. Due to the age of these plants, their operation compromises with the air quality and health even when emissions are within permissible standards. Due to this reason, South Africa had to constantly choose between uninterrupted power supply and the health of its citizens. 

World Bank’s Aid:

The World Bank has been diligently working towards sustainable development in Africa. According to its strategy for 2019-23, it has doubled its investment in climate related projects in the country in the last five years. The report assures that “the World Bank Group will provide $22.5 billion for climate adaptation and mitigation in Africa over five years from 2021–2025.” Its sub-regional power pools in the country are helping in a cheaper and more efficient purchase and sale of power and its uninterrupted and reliable supply in Africa. 

According to Marie Francoise Marie-Nelly, Director for South Africa at the World Bank, “This loan will significantly benefit the people of South Africa, particularly the most vulnerable households, the national economy, the environment, and expedite the transition to cleaner energy sources.” In conveying so, she summarized the key focus points of the World Bank which is sustainable development, investment in people, and bolstering efficient economies. The World Bank has also maintained that its Development Policy Loan would help reduce water and air pollution by decreasing the reliance on coal for power generation. The decision comes a month after the Nairobi Declaration where several African countries came together, raising concerns about financing African nations in addressing climate change, and proposed Carbon taxation as a solution. 


The South African government has already decided to split Eskom into three subsidiaries- transmission, generation, and distribution. Furthermore, it also reduced the debt on Eskom by taking on $13.3 billion which was at the risk of default. With the proposed aid of the World Bank, South Africa will surely overcome its sustainable power crisis in the near future.