South Africa: African Development Bank support $300M for energy governance and climate resilience

The Board of Directors of the African Development Bank Group (AFDB) has approved a $300 million loan to support South Africa in implementing its Energy Governance and Climate Resilience Programme.

In collaboration with development partners such as the World Bank and KfW Development Bank (KfW), the approved Programme is set to propel South Africa’s energy transition forward.

The approved Program is poised to stimulate economic growth through structural reforms aimed at restoring energy security. It will additionally encourage private sector involvement in the electricity market and improve the operational efficiency of Eskom, aligning with South Africa’s Energy Action Plan and the Just Energy Transition Investment Plan.

The Program will expedite mitigation and adaptation initiatives by fostering renewable energy generation and transitioning businesses to low-carbon activities. This will lead to a reduction in the carbon footprint of the South African economy and enhanced financing for green projects. These anticipated outcomes align with South Africa’s updated Nationally Determined Contribution and the country’s Long-term Low-Emissions Development Strategy.

It will ensure the security and affordability of energy for families and small businesses. It will enable the government to increase budget allocations to connect electricity to poor households and establish a mechanism to encourage families and micro- and medium-sized businesses to invest in renewable energy.

The reform priorities, as deliberated with the Government, are crafted to complement and synergize with the ongoing support from the African Development Bank and other development finance institutions for the Just Energy Transition.

Through a $629 800 (470 000 UA) grant with co-financing from the Climate Insurance Fund, the Bank will provide support to ensure affected communities are not left behind, crowd in more women as decision-makers and support young entrepreneurs, especially women, to build skills and create jobs for the green economy.

South Africa’s country’s Energy Governance and Climate Resilience Programme aligns with the African Development Bank’s ‘High 5’ strategic priorities, especially “Light up and Power Africa”, “Industrialize Africa”, and “Improve the quality of life for the people of Africa”.

Welcoming the initiative, Director General for Southern Africa, Leila Mokaddem, highlighted the African Development Bank’s extensive support for South Africa’s energy sector, constituting 43.4% of the Bank’s portfolio. The program seamlessly complements this commitment and is in line with the recently approved Country Strategy Paper (CSP) for South Africa, acknowledging the pivotal role of energy reforms in fostering economic growth and enhancing business confidence.