AfDB Pledges $1 Billion to Support South Africa’s Energy Transition

The African Development Bank Group has greenlit a groundbreaking $1 billion guarantee initiative in partnership with the UK’s Foreign Commonwealth and Development Office (FCDO). This initiative is aimed at bolstering the Bank’s lending capacity to bolster South Africa’s Just Energy Transition (JET).

In collaboration with the Republic of South Africa’s government, the program will foster projects aligned with South Africa’s JET investment blueprint. These encompass a wide spectrum, including transmission and grid-balancing storage, renewable energy generation, energy efficiency, municipal electricity delivery rehabilitation, green hydrogen, and the integration of new electric vehicles. The program specifically emphasises the “just” aspect, focusing notably on the Province of Mpumalanga, situated in the northeastern region, adjacent to Eswatini and Mozambique.

The approval arrives during COP28, a critical juncture for enhancing climate finance. Dr. Kevin Kariuki, the African Development Bank Vice President for Power, Energy, Climate, and Green Growth, highlighted this initiative as an innovative operation, affirming the Bank’s leadership in propelling climate finance access for Africa’s low-carbon development and net-zero aspirations.

Melinda Bohannon, the FCDO Director General of Humanitarian and Development, reiterated the commitment to the Just Energy Transition Partnership with South Africa. She emphasised the initiative’s role in fostering green growth, job creation, bolstering energy security, and aiding South Africa in meeting its carbon reduction targets outlined in the National Determined Contribution.

Mmakgoshi Lekhethe, Deputy-Director General for Asset and Liability Management in South Africa’s National Treasury, expressed satisfaction with the approval. Lekhethe emphasized the partnership’s significance in facilitating South Africa’s just energy transition, ensuring it is socially responsible. The collaboration aims to work closely on the implementation and financing of projects outlined in the JET Implementation Plan.

Max Ndiaye, Director of Syndications, Co-financing, and Client Solutions, hailed this collaboration as a testimony to the Bank’s commitment to enhancing capital adequacy, as recommended by the G20. This strategic move aims to optimise the balance sheet of Multilateral Development Banks (MDBs) through intensified cooperation and additional shareholder support.

Leila Mokaddem, African Development Bank Director General for Southern Africa, affirmed the Bank’s unwavering dedication to assisting South Africa on this pivotal journey toward a Just Energy Transition.

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Source: African Development Bank