South Africa secures R8.4bn loan from AfDB to accelerate Just Energy Transition

South Africa has inked a 15-year, $474.6 million (around R8.4 billion) loan agreement with the African Development Bank (AfDB) in a bid to bolster its energy transition efforts, the National Treasury announced on Thursday.

This crucial financing is part of the third Development Policy Operation and comes with collaboration from key international players including the World Bank, KFW Development Bank, Japan International Cooperation Agency, and the Organization of the Petroleum Exporting Countries Fund for International Development (OPEC Fund).

Treasury said the agreement marked a pivotal step in South Africa’s ongoing efforts to implement the Just Energy Transition (JET), a plan designed to enhance the efficiency, resilience, and sustainability of the country’s infrastructure services.

It said this loan agreement echoed the first policy loan secured earlier in 2023, reinforcing South Africa’s commitment to sustainable development through an energy-inclusive strategy.

The partnership with the AfDB is positioned as a cornerstone of South Africa’s development agenda, seeking to improve energy security measures while accelerating the decarbonisation of the economy.

Not only does this agreement have the potential to drive meaningful structural reforms, but it also aims to increase the socio-economic benefits associated with the energy transition, ultimately facilitating inclusive economic growth and fostering job creation.

Reflecting on the partnership, Treasury expressed profound appreciation to the AfDB for its unwavering support of South Africa’s development objectives.

It noted the significance of implementing critical reforms in the energy and transport sectors, which are essential to advancing the goals of the Just Energy Transition, while fulfilling foreign currency commitments at lower interest rates.

As South Africa works towards a sustainable energy future, this substantial financial backing from the AfDB signals renewed hope and opportunity for a nation striving to navigate the complex challenges posed by climate change and economic disparity.

It underscores the collaborative efforts required to facilitate an energy sector transformation that benefits all South Africans.

BUSINESS REPORT