Billions for broken rails – or broken promises?

South Africa has just secured nearly US$2 billion in loans to fix its collapsing infrastructure. That’s not small change. It’s the kind of money that could, theoretically, electrify our railways, unclog our ports, and give road freight a run for its money. Will this happen in practice, though? The question on many lips is simple: will the cash repair the country, or just disappear into the usual black holes?

In July 2025, the African Development Bank (AfDB) approved a US$474.6-million loan to South Africa to improve its energy and transport infrastructure. Just days before, the World Bank signed off on a $1.5-billion deal with similar aims. Germany’s development bank (KfW), Japan’s JICA, and the OPEC Fund are also chipping in. That’s a staggering amount of capital being poured into a nation whose supply chains are gridlocked and whose economy is gasping for air.

The goals are laudable: upgrade power lines, reform Transnet’s failing rail systems, ease congestion at ports, and stimulate growth. But the real question is this: what are the chances of this money actually doing what it’s supposed to do?

A gift to corruption?

Writing in the Rational Standard on 24 July 2025, Nigerian economist Econ Bro* didn’t mince his words. His article, “The AfDB’s $475 million loan – a gift to corruption, not infrastructure,” offered a searing indictment:

“South Africa’s own record,” he wrote, “shows that large cash injections often leak away before they touch concrete or steel.”

He pointed to a string of examples that, frankly, are as familiar as they are infuriating:

• Former Eskom CEO André de Ruyter told Parliament that R1 billion per month was being lost to theft and fraud – and that was his conservative estimate.
• McKinsey’s local arm was found guilty of paying bribes to officials at Eskom and Transnet, forfeiting over $120 million.
• The Medupi and Kusile power stations are running R300 billion over budget and still aren’t operating at full capacity.

Each of these scandals bleeds the very systems the new loans are supposed to fix. It’s like topping up a leaking tank without first repairing the holes – and then wondering why the level keeps dropping.

Lessons from Kenya and Nigeria

Econ Bro’s article draws comparisons with other African countries where big-ticket infrastructure funding has largely failed.

Nigeria, he notes, spent ₦11 trillion (yes, trillion) on power projects between 1999 and 2023. The result? Idle turbines, ghost transmission lines, padded management fees, and millions of citizens still relying on diesel generators.

Then there’s Kenya’s Standard Gauge Railway – a gleaming new train funded by Chinese loans, that opened in 2017 to great fanfare. But according to watchdogs, the actual cost was triple the original tender, thanks to hidden fees and kickbacks. Freight volumes underperformed, fares soared, and taxpayers are now saddled with the debt while the expected economic boom has yet to arrive. Will South Africa be any different?

The political economy of failure

Here’s the uncomfortable truth, as Econ Bro lays it out: corruption isn’t a bug in government infrastructure projects. It’s often a feature. Why?

There’s no profit and loss test in government, no threat of bankruptcy, no need to earn the money before spending it. When you give state agencies massive budgets with limited oversight, you’re asking people to spend other people’s money on other people’s priorities, with little accountability.

“Corruption, then,” Econ Bro argues, “is not caused by a lack of rules, but by a system that allows unchecked power over other people’s money.”

We’ve seen this time and again in South Africa. Infrastructure budgets become election war chests, contracts go to cronies,  and middlemen inflate prices… and the public? We’re stuck with delayed projects, faulty power lines, and freight trains that simply don’t arrive.

Guardrails or window dressing?

There are solutions. The Rational Standard piece outlines some: public tendering, real-time tracking of funds, third-party audits, and consequences for dodgy officials. But even those guardrails, Econ Bro warns, are not bulletproof: “Just as private entrepreneurs innovate to meet consumer needs, public actors often innovate to bypass safeguards.”

This is devastatingly true in South Africa. Procurement rules, for example, are routinely gamed, while transparency mechanisms get buried in bureaucracy and oversight bodies are often too weak – or too politicised – to act.

Can we afford more failure?

Let’s be clear: South Africa desperately needs infrastructure investment. Our power grid is fragile, our railways are strangling exports, and our ports are global punchlines.

These loans could – could – mark a turning point… but they must come with serious conditions, independent monitoring, and consequences for failure. If not, we risk repeating the cycle: borrow big, build little, and pay dearly.

Remember: these loans aren’t “free money”. They’re debts. Our children will pay them off. If we squander them, we won’t just delay recovery – we’ll bury it.

So what now?

The coming months are critical. Treasury must provide transparency, parliament must exercise oversight, and civil society must keep pressure on. Every single one of us – as voters, taxpayers, and citizens – must demand accountability.

As Econ Bro concludes, with chilling accuracy: “Unlike private spending where corruption is less likely because waste leads to losses, government spending always puts the option of corruption on the table. For the sake of the SA people, I hope I am wrong, but experience teaches me that this AfDB loan will not be different.”

I hope he is wrong. Because if this money disappears too, we’ll all be left waiting on a train that never comes.

* Econ Bro (@EconBreau and @EconBreau2 on Twitter/X) is a Nigerian Austrolibertarian economist and an apprentice at the Mises Institute. Under the organisation name “The Freedom Institute” he teaches individual liberty, personal responsibility, private property rights, free markets, and sound money to mostly young people across Nigeria. Econ Bro is an associate of the Free Market Foundation.