The Congress of South African Trade Unions (Cosatu) and the South African Communist Party (SACP) are wary of World Bank lending because they say the bank imposes political conditions in exchange for loans. But yesterday Manuel said the ruling party’s two allies should open their minds on the issue.

“Part of our discourse with our allies must be about an unshackling of the mind about what works and does not work and the reasons that actually impel countries to take decisions,” he said.

The possibility of large-scale borrowing by SA was raised in an African National Congress (ANC) discussion document on economic policy released last month.

The paper has become a source of controversy between the ANC and Cosatu and the SACP because its recommendation for an easing of labour laws also proposes a massive infrastructure investment programme, which would partly be financed by borrowing from the bank.

“It is quite important that we assist our allies to think more laterally about these issues,” the finance minister said.

He said they should recognise that lenders always tried to set conditions. Both China, which has large foreign exchange reserves, and India, borrow from the bank, but did not feel compromised, he said.

Cosatu spokesman Patrick Craven said yesterday the federation would not be drawn on the issue of expanding SA’s borrowing from the World Bank. It was, however, “opposed to attempts to provide assistance through political conditions”, he said.

SA will be the last leg of Wolfowitz’s four-nation trip to Africa this week, his first as World Bank president. It includes Nigeria, Burkina Faso and Rwanda, and suggests that the continent will be his first priority and that he is keen to listen to African views.

The bank has been eager to lend to SA on a large scale and the issue was raised on each of the three visits by former bank president James Wolfensohn.

But Manuel said SA had generally not found it cost-effective to borrow from the bank as money was cheaper on the capital markets.

“We would want to borrow at the best possible rates. At the end of the day money is fungible, but because of the rates at which we borrow we have not found it attractive enough to borrow from the bank,” Manuel said.

Since 1994 SA has only taken two small World Bank loans. The first, of $24m, which has been fully disbursed, was made for the trade and industry department.

The other, for $15m, is to improve financial management at municipalities.