The South African Federation of Trade Unions (SAFTU) has criticised the government’s decision to secure a US$1.5 billion (R25 billion) Development Policy Loan from the World Bank, arguing that additional borrowing will do little to revive economic growth or address the country’s structural challenges.
The criticism follows the National Treasury’s announcement that the loan will support reforms in the electricity, freight and logistics sectors, while helping to improve water and sanitation infrastructure. Treasury says the funding is intended to remove infrastructure bottlenecks, stimulate investment and create an environment conducive to economic growth and job creation.
However, SAFTU argues that previous World Bank loans have failed to deliver the promised economic benefits.
Speaking to YOU FM Newshour, SAFTU national spokesperson Newton Masuku said South Africa had already borrowed R69.4 billion through Development Policy Loans since 2022, yet economic growth has remained subdued and unemployment continues to weigh heavily on the economy.
“There is no evidence to suggest that this loan will provide a lifeline for the economy,” Masuku said.
“We have not seen meaningful economic growth. Instead, the economy has remained stagnant, while unemployment remains at crisis levels under the expanded definition.”
Masuku also questioned whether previous borrowing had translated into tangible improvements in public infrastructure, pointing to ongoing electricity, water and logistics challenges.
He cited prolonged water outages in Johannesburg as an example of what he described as the government’s failure to deliver on infrastructure commitments linked to earlier funding agreements.
“We have not seen the promised improvements in water provision, electricity infrastructure or Transnet’s logistics network. Those commitments have simply not materialised,” he said.
SAFTU has called on the government to publish the full World Bank loan agreement, including all policy commitments, implementation benchmarks, procurement obligations, repayment schedules and conditions attached to the financing.
The federation argues that greater transparency is essential to allow businesses, investors, organised labour and the public to assess the long-term fiscal and economic implications of the agreement.
It also maintains that government should have explored alternative financing options before turning to multilateral borrowing, warning that rising public debt could place additional pressure on the country’s finances without guaranteeing stronger economic performance.
While acknowledging South Africa’s urgent infrastructure needs, SAFTU contends that sustainable economic growth will depend on effective implementation, improved governance and greater accountability rather than additional borrowing alone.
The federation has also warned that it is considering nationwide protest action against the loan, saying it believes the agreement could have significant consequences for workers and the broader economy.
