World Bank Grants $750 Million Covid-Relief Loan to South Africa

The low-interest loan “will contribute towards addressing the financing gap stemming from additional spending in response to the Covid-19 crisis,” Treasury Director-General Dondo Mogajane said in a statement Friday. “It will assist in addressing the immediate challenge of financing critical health and social safety net programs.”

Covid-19 has killed almost 94,000 people in South Africa, the most on the continent. Restrictions imposed by the government to stop the spread of the disease led to the biggest economic contraction in almost three decades in 2020 and led to a surge in job losses in a country with the world’s highest unemployment rate.

“This support aims to put the country on a more resilient and inclusive growth path by leveraging South Africa’s strength to mitigate the effects of the Covid-19 crisis through their strong social safety net and by advancing critical economic reforms,” World Bank Country Director for South Africa Marie Francoise Marie-Nelly said in the statement.

South Africa’s government has faced calls from civil society for increased welfare spending. A panel that includes a former National Treasury official last month recommended the country gradually implement a basic income grant, beginning with the institutionalization of a monthly welfare payment that was first introduced in 2020 and is due to expire in March.

Business organizations say a basic income grant is unaffordable, while the Treasury has said it will only set aside additional funds for social relief if state finances improve by February. Finance Minister Enoch Gondongwana will present his annual budget on Feb. 23.