SA's Debt Crisis: A Crippling Embrace of the World Bank

Zamikhaya Maseti

On June 24, 2025, the National Treasury released an official statement: “South Africa and the World Bank sign USD 1.5 billion loan agreement to support infrastructure modernisation and development.”

According to Treasury, the loan will “unlock key infrastructure bottlenecks,” particularly in the energy and freight transport sectors. The financing terms are said to be generous: a 16-year maturity, a three-year grace period, and an interest rate benchmarked at the Secured Overnight Financing Rate (SOFR) + 1.49%. In simple Development Finance terms, this interest margin suggests that the loan carries relatively favourable conditions compared to commercial borrowing. 

The World Bank technocrats would have us believe that this Development Policy Loan (DPL) is both progressive and developmental. But behind this clinical language of policy and project finance lies a deeper crisis, a State slowly surrendering its developmental autonomy in exchange for liquidity.

In 2022, South Africa was granted a US$750 million COVID-19 relief loan, drawn from the same DPL mechanism. It was intended to stabilise the health system and support social protection. But that loan was scavenged shamelessly and systematically by the compradorial bourgeoisie and economic vultures. They tore through it like hyenas around a carcass.

 Who can forget, during the great looting spree, how overnight, car guards, taxi owners, tavern tycoons, traditional leaders, and healers became registered “suppliers” of the Personal Protective Equipment (PPEs)? Most of the PPEs were of dubious quality, grossly overpriced, and delivered late, if at all, while the dying masses gasped for breath in overcrowded, under-equipped COVID-19 wards. Those who survived the pandemic awoke in a country where the crisis had been monetised, and the hospital became a feeding trough for a corrupt elite dressed in designer ethics.

Yes, another World Bank loan. Another embrace of the very institution that generations of African Political Economists from Walter Rodney to Samir Amin warned us would never be a partner in liberation. The intellectual bloodlines of our radical thinkers have long declared: the Bretton Woods institutions are not development partners; they are enforcers of dependency.

Walter Rodney, in How Europe Underdeveloped Africa, did not write in polite ambiguity. He was precise and surgical. Underdevelopment, he argued, was not a historical accident nor a technical gap, but a deliberate act imposed through imperial finance, colonial infrastructure, and economic coercion.

Today, that analysis breathes again. South Africa, a constitutional democracy, a supposed developmental State, is now borrowing from the very institution that has for decades rehearsed economic suffocation across the continent: Ghana, Zambia, Kenya. We are told this loan will modernise transport corridors, reform Eskom, and support a “green economy transition.”

But herein lies the enduring warning of African Political Economy scholars of the 1960s and 70s: World Bank conditionalities were never neutral technocratic tools. They were ideological weapons designed to discipline post-colonial states and re-inscribe Western hegemony in economic terms.

In the first decade of economic development and independence (1960–1970), newly independent nations like Ghana and Tanzania pursued bold paths of import substitution, state-led industrialisation, and social welfare. The World Bank responded by pressuring them to liberalise trade, dismantle subsidies, and invite foreign capital. When they resisted, funding was frozen. Sovereignty was punished.

In the second decade of economic development and independence (1970–1980), as oil shocks and collapsing commodity prices crippled African economies, the World Bank returned not with solidarity, but with Structural Adjustment Programmes (SAPs): austerity masquerading as reform. Zambia was forced to privatise its mines, slash public spending, and devalue its currency. These were not technical corrections. They were ideological assaults driven by a neoliberal agenda to open Africa’s veins to global capital. Development was delayed. Poverty was institutionalised.

Today, South Africa, which still boasts of its economic sophistication, appears to have forgotten these lessons. Our gross government debt has now ballooned to R5.2 trillion, more than 74% of GDP, with R385 billion spent annually just to service that debt. This is not fiscal management, this is economic haemorrhaging. And we have yet to account for the hidden costs of this new loan: procurement dependency, policy capture, and technocratic drift.

At the centre of this crisis lies the crumbling foundation of our public health system. For decades, it leaned heavily on foreign aid, especially from USAID, which supported HIV, TB, and maternal health programmes. But now, under Donald Trump’s second term with its evangelical, nationalist, anti-globalist turn, USAID funding has been pulled. The consequences are immediate and brutal: clinics without ARVs, retrenched health workers, and rural hospitals collapsing. The system is already disintegrating. And into these vacuum steps, the World Bank not with a health rescue package, but with a spreadsheet of infrastructure loans and governance reforms.

So, we must ask, again: what exactly is this new loan for? What does a “green transition” mean when rural clinics can't even keep the lights on? Will Eskom’s restructured grid serve the poor, or simply power private extraction? Why has there been no public debate, no parliamentary interrogation, no provincial consultation?

Is South Africa bankrupt? Not yet, in the narrow technical sense. But ideologically, we are bankrupt of imagination. Development has been outsourced to multilateral lenders with no stake in our sovereignty. The borrowing continues, but each loan chips away at our autonomy, our dignity, our democratic will. We must re-read Walter Rodney. Revisit Samir Amin. Reclaim the dreams of Kwame Nkrumah, Samora Machel, Steve Biko, and Robert Sobukwe. Maybe we must begin to learn from Captain Ibrahim Traoré of Burkina Faso, who is sending the imperialists packing.

He is taking full control of the commanding heights of the Burkinabé economy, delivering tractors to the rural poor, supplying them with seed and inputs, purchasing ambulances for neglected clinics, and turning regions of Burkina Faso into construction sites. He is building roads. He is building power. And he is doing all this without a World Bank loan, but by restructuring the national fiscus and repurposing Burkina Faso’s developmental trajectory from dependency to sovereignty.

What is needed now is not more external credit, but a return to the Pan-African developmental imagination: state-led industrial policy, solidarity-based trade, local capital mobilisation, and a bold, redistributive developmental state. Because if we do not, we will continue dancing with the World Bank, a partner that never lets go until the music dies.

* Zamikhaya Maseti is a Political Economy Analyst with a Magister Philosophiae (M. PHIL) in South African Politics and Political Economy from the University of Port Elizabeth (UPE), now known as the Nelson Mandela University (NMU).

** The views expressed do not necessarily reflect the views of IOL, Independent Media or The African.