South Africa is launching a credit-guarantee vehicle to unlock billions in infrastructure investment, aiming to mobilize private capital while easing pressure on the state. The Development Bank of Southern Africa will oversee the program, which could leverage up to four times its initial $500 million in capital.

The initiative comes as South Africa faces $40 billion in contingent liabilities from past sovereign guarantees to scandal-hit state companies. With a 1.07 trillion rand infrastructure budget over three years, the government sees the fund as crucial for expanding power grids, water systems, and ports without further straining public finances.

Development Bank executive Mpho Mokwele said the fund has already secured $350 million from the World Bank and is in talks with major lenders including the African Development Bank and Germany’s KfW. The program will target projects from renewable energy transmission to hospitals, with the national grid expansion alone expected to cost 440 billion rand.