The African Development Bank (AfDB) has approved a $503.75 million loan to South Africa to support reforms opening the country’s electricity, freight transport and water sectors to greater competition and private investment, bringing the bank’s budget support for South African infrastructure reforms since 2023 to more than $1.2 billion.
The Infrastructure Governance Reform Programme is the third such operation since 2023 and is being implemented within a development-partner framework led by South Africa’s National Treasury, with the loan designed to strengthen institutions, regulatory arrangements and the conditions needed to attract private capital into infrastructure services.
In electricity, the reforms will move Eskom away from being the sole buyer and seller of power, with the National Energy Regulator of South Africa having issued a market-operator licence to the operator within the National Transmission Company South Africa, while approving grid-capacity allocation rules and establishing a market surveillance and competition unit. The target is for the wholesale electricity market to account for 10 per cent of total electricity transactions by December 2027.
In freight transport, the Transnet Rail Infrastructure Manager is allocating train paths across 21,232 kilometres of track, with at least 11 slots across six corridors awarded to private train operators in August 2025, while the regulator is expected to approve at least six new private rail and port operators by December 2027, with rail freight throughput targeted to rise from 161 million to 180 million tonnes annually. The programme also includes licensing for municipal water suppliers, with the AfDB expecting the reforms to deliver shorter truck queues at Durban port, more reliable water supply and competitively priced electricity.
The new loan builds on $300 million approved in 2023 for the Energy Governance and Climate Resilience Support Programme, which supported electricity-sector restructuring, Eskom’s financial sustainability and the establishment of the National Transmission Company South Africa, as well as $474.5 million approved in 2025 under the Infrastructure Governance and Green Growth Programme, which strengthened electricity-market reforms, renewable-energy integration and transport-sector changes. The AfDB says the reforms are expected to mobilise private capital for electricity transmission and rolling stock, strengthen institutions responsible for infrastructure financing, and support job creation.
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