The South African Federation of Trade Unions (SAFTU) rejects the government’s decision to accept a US$1.5 billion, approximately R25 billion, Development Policy Loan from the World Bank.
This is not simply an infrastructure loan. Development Policy Loans are designed to support policy reforms negotiated between governments and international financial institutions. There is no such thing as free money. Every loan carries obligations, conditions and future costs.
SAFTU therefore demands that government immediately publish the complete loan agreement, including all conditions, prior actions, policy commitments, implementation benchmarks, repayment terms and monitoring arrangements. Parliament, organised labour and the public have a democratic right to know what government has agreed to in their name.
South African workers have heard these promises before. Liberalisation, deregulation and increased private-sector participation have repeatedly been presented as the route to investment, growth and employment. Yet the country continues to experience weak growth, mass unemployment, deindustrialisation, deepening inequality and deteriorating public services.
Since South Africa entered the Development Policy Loan programme in 2022, government has borrowed approximately US$4.25 billion from the World Bank. Yet neither the World Bank nor National Treasury has produced independently verified evidence showing how many decent and sustainable jobs these loans have created or how they have materially improved the lives of working people.
History gives workers every reason to be sceptical. Across Africa and the developing world, World Bank and IMF loans were used to impose Structural Adjustment Programmes requiring privatisation, austerity, trade liberalisation, public-sector retrenchments and the commercialisation of essential services. Development Policy Loans risk becoming Structural Adjustment Programmes by another name.
SAFTU agrees that South Africa must urgently rebuild electricity generation, railways, ports, water systems and other infrastructure. The real question is who will own and control these strategic sectors and in whose interests they will operate.
Eskom, Transnet, PRASA and municipal water systems must serve industrialisation, affordable public services, decent employment and national development. They must not be transformed into commercial markets in which the state carries the risks while private investors extract the profits.
SAFTU is also concerned about foreign-currency borrowing. The cost of a dollar-denominated loan rises when the rand weakens. What is presented today as a R25 billion facility could become significantly more expensive over time, increasing the burden of debt servicing and creating further pressure for austerity, wage restraint, spending cuts and higher taxes.
Workers and the poor are always expected to pay for these choices. Government repeatedly claims that there is no money for teachers, nurses, police officers, municipal workers, social protection and public infrastructure, while billions are committed to servicing debt.
It is equally unacceptable that African countries are encouraged to borrow while enormous resources are lost through illicit financial flows, corporate tax avoidance, transfer pricing, corruption and profit shifting. South Africa must first mobilise its own wealth by strengthening SARS, closing tax loopholes, recovering stolen funds and ensuring that multinational corporations pay their fair share.
SAFTU calls on government to publish the full loan agreement, submit it to Parliament and public scrutiny, reject all conditions advancing privatisation and austerity, rebuild strategic state-owned enterprises, combat illicit financial flows and adopt a coherent industrial policy based on manufacturing, beneficiation, localisation, public investment and decent work.
The Freedom Charter declared that the people shall share in the country’s wealth. South Africa’s future cannot be mortgaged to international finance. It must be built by its workers, financed by the wealth created within our country and guided by the democratic will of our people.
A statement was issued on behalf of SAFTU by the General Secretary, Zwelinzima Vavi.
For media inquiries, contact the National Spokesperson at:
Newton Masuku newtonm@saftu.org.za
0661682157
Media Officer: Asive Dyani 0719019564
