SOUTH AFRICA – The World Bank’s Group Board of Executive Directors has approved a US$ 474M (€454.4 million) low-interest loan to South Africa for the country’s Covid-19 Emergency Response Project including financing vaccine procurement contracts.
South Africa will use the loan to finance the country’s acquisition of 47 million Covid-19 vaccine doses in an effort to increase vaccine coverage, curb the spread of the virus and boost the country’s economic recovery.
In addition, the funds will support the South African Government to create the fiscal space needed to strengthen its health system and ensure financial and institutional sustainability as the spread of the virus continues to pose a threat to South Africa’s citizens, health system and economic recovery.
The financing for vaccine procurement comes at a time when South Africa is the epicentre of the Covid-19 pandemic in Africa, with the highest cumulative numbers of infections and deaths in the region as the country experiences its fifth wave.
South Africa has recorded the most coronavirus cases and deaths on the African continent, with over 3.9 million confirmed cases and more than 101,000 deaths after struggling to secure vaccines due to limited supplies and protracted negotiations.
The South African Government will use the funds to buy millions of additional vaccine doses to facilitate the country’s COVID-19 vaccination program as well as help the government to better cope with the ongoing pandemic.
Moreover, the loan forms part of government efforts to cut debt-service costs by making use of cheaper sources of funding through multilateral development banks to support the health system to respond to COVID-19 through the roll-out of vaccines, critical research, and treatment measures.
The loan will also complement support from the International Monetary Fund, the African Development Bank and the New Development Bank as part of the Government of South Africa’s broader financing strategy to access external financing from international financial institutions.
The funding aims to put the country on a more resilient and inclusive growth path by boosting South Africa’s Covid-19 vaccination efforts with the goal of vaccinating up to 70% of the country’s target population.
Earlier this year, the World Bank approved South Africa’s request for a US$750 million (R11.43 billion) low-interest loan aimed at assisting the country’s economic recovery from COVID-19 which aims to protect the poor and vulnerable from the pandemic’s negative socioeconomic impacts.
The recent World Bank budget support will further contribute towards addressing the financing gap stemming from additional spending by the South African Government in response to the COVID-19 crisis while addressing the immediate challenge of financing critical health and social safety net programmes.
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