South Africa has continued making strides in its quest for a Just Energy Transition amid an electricity crisis after France and Germany extended more than R10 billion in finance.
France and Germany have signed loan agreements for the two European nations to each extend €300 million, or at least R10.7bn, in concessional financing to South Africa to support the country’s efforts to reduce its reliance on coal through a just transition to cleaner energy sources.
The loans are provided by the French and German public development banks, AFD and KfW, directly to the South African government via the National Treasury.
The Treasury’s acting director-general, Ismail Momoniat, said the government welcomed concessional funding from AFD and KfW, which forms part of support for the Just Transition.
Momoniat said while South Africa still required more support for its Just Transition path, this funding would assist in addressing the challenge of financing the critical adaptation and mitigation programmes and supporting a resilient, sustainable and inclusive growth.
“The funding will also provide much-needed catalytic funding for the implementation of the Just Energy Transition investments plan in mapping out a just transition to a low-carbon, climate-resilient economy and society,” he said.
“These loans are concessional and contribute to the government’s efforts to mitigate rising government debt costs.”
The financing agreements were acknowledged and welcomed by President Cyril Ramaphosa, French President Emmanuel Macron and German Chancellor Olaf Scholz at a ceremony held at the 27th UN Climate Change Conference (COP27) in Egypt.
The signing represents a significant milestone in the implementation of the Just Energy Transition Partnership (JETP) announced at COP26 in November last year.
The JETP is a long-term partnership between South Africa, France, Germany, the UK, the US and the EU.
The first initiative of its kind, the JETP aspires to support South Africa in accelerating its journey to a low-carbon economy and climate-resilient society.
Last year, the founding partners of the JETP, known as the International Partners Group (IPG), pledged to mobilise an initial amount of $8.5bn over the next three to five years to advance the partnership.
Silke Stadtmann, KfW Development Bank country director for South Africa, said they welcomed South Africa’s commitment to reducing electricity generation from environmentally harmful coal.
“This is an important step in achieving the country’s climate goals,” Stadtmann said.
“As a long-term partner of South Africa, we support these efforts not only with concessional loans for necessary investments and grants for a Just Energy Transition, but also with comprehensive studies on energy sector reform.”
Audrey Rojkoff, AFD regional director for southern Africa and country director for South Africa, said most countries around the world were trying to find a balance between inevitable short-term trade-offs and the long-term perspective of a future where nature and people prosper.
“All partners can make better progress by sharing their experiences, and international institutions have an important role to play by encouraging dialogue,” Rojkoff said.
“This first public policy loan to South Africa aims precisely at promoting policy dialogue between our countries.”
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