Experts have cautiously welcomed the World Bank’s recent $1 billion (about R18.6bn) loan to South Africa aimed at assisting to tackle the country’s energy crisis and facilitate a green transition.
The World Bank last week said its Development Policy Loan would contribute to a gradual reduction in water and air pollution by reducing the reliance on coal for power generation.
Deputy director-general for asset and liability management in the National Treasury, Mmakgoshi Lekhethe, said it came at a crucial time for South Africa as it “will provide much-needed fiscal and technical support, enabling us to pursue our policy priorities in the energy sector, including easing the electricity crisis in the long term, stimulating private-sector engagement and creating jobs in the renewables space”.
Weighing in on the matter, independent economist Professor Bonke Dumisa said that South Africa currently had a government debt of over R4bn.
“We spend R366bn a year, or R1bn a day, on debt servicing costs alone.
Under these circumstances, I am normally strongly against the South African government taking new loans.
“However, I am pragmatically making an exception to this particular World Bank $1bn soft loan, at a very low interest rate, which is to be used in our just transition efforts in fixing our electricity load-shedding problems.
“Under these circumstances, we can justify adding more to our debt-to-GDP challenges if that can help us get rid of load shedding problems,” he said.
Stellenbosch University Centre For Renewable and Sustainable Energy Studies Professor Sampson Mamphweli added that any kind of help for the country was welcome.
“I see that the funds are meant to assist with various things, including the process for Eskom restructuring, dealing with the transmission lines, fixing of the existing Eskom fleet and supporting the transition to a low carbon economy.
“As things stand, South Africa needs about R200bn to fix the ailing coal fleet. We need an additional R200bn to expand the transmission lines to accommodate renewable energy projects. The funding from the World Bank will make a difference ,depending on how it’s used and which of the areas above will it focus on,” he said.
Cape Times