For years, South Africa’s power crisis impacted nearly every part of daily life—darkening homes, disrupting essential services, constraining businesses, and holding back economic growth. In 2023 alone, power outages cut GDP by 2% and cost 500,000 jobs.
At the same time, the COVID-19 pandemic exposed another critical vulnerability: Africa’s heavy dependence on imported vaccines and the risks communities face when global supply chains break down.
Today, South Africa is tackling these vulnerabilities by combining government reforms with targeted multilateral support to attract private investment in reliable energy and local vaccine manufacturing, helping to build a more resilient economy, reinforce health security, and create jobs. The World Bank Group (WBG) is contributing to this effort through financing, policy support, and instruments designed to help mobilize private capital.
Over the past four years, the amount of private capital mobilized through the WBG in South Africa grew almost ninefold—from $440 million in FY22 to $3.9 billion in FY26, totaling nearly $7 billion. This growth in capital helped accelerate transformation of the energy sector.
Unlocking Energy Investment
South Africa’s energy crisis was partly because of long domination of the sector by the state-owned utility Eskom, with limited space for private participation. Licensing requirements prevented independent power producers from entering the market, while restricted grid access and financing risks held back investment in new power generation.
To address these constraints, the government launched a broad reform program to open the sector to private investment. It removed licensing requirements, expanded private generators’ access to the grid, introduced tax incentives to promote renewable energy uptake among households and small businesses, and established the Energy Bounce-Back Scheme to reduce credit risks for commercial lenders financing smaller projects. An initial $1 billion WBG development policy loan in 2023 supported market opening reforms, with subsequent policy, technical assistance, and lending support helping deepen reforms and reinforce investor confidence.
The results have been significant. By July 2026, reforms supported by the WBG had helped create the conditions for private renewable energy investment to increase sixfold since 2023, reaching about $3.9 billion this year. Electricity supply also became more reliable. Eskom’s Energy Availability Factor had risen to 66.16% from 55% in 2023—its strongest year-to-date performance in six years—while load shedding had been virtually eliminated for about 18 months.
In South Africa, like elsewhere, reliable and affordable energy is essential for strong economic growth and job creation.
