South Africa Receives R7.6 Billion Boost from France for Just Energy Transition

In a landmark move for sustainable development, South Africa has recently concluded negotiations for a significant R7.6 billion loan with the Agence Française de Développement (AFD) to propel its Just Energy Transition Plan (JETP) forward. The deal is pivotal in South Africa’s quest to evolve into a low emissions economy and is aligned with the country’s commitment to mitigating climate change impacts.

The AFD's loan—their largest ever on the balance sheet—was tailored in close cooperation with the JET Programme Management Unit (JET-PMU) in the South African Presidency and National Treasury. This collaboration underscores the French development agency’s goal of supporting the just dimensions of the JET, which places high importance on improving social outcomes for the affected local communities.

This new loan complements the initial €300 million policy-based loan delivered in 2022 and elevates France’s total support for South Africa’s JETP to €700 million, echoing the nation’s €1 billion pledge at the COP26 (United Nations Climate Change Conference) in Glasgow.

National Treasury’s Head of Asset and Liability Management, Mmakgoshi Lekhethe, stated the collaboration with the AFD offers South Africa an unprecedented opportunity to confront practical issues such as job creation, skill development, social support, and governance. Addressing these challenges requires effective coordination across different levels of government, which is crucial to integrate JET within South Africa’s fiscal policies.

The financing arrives at a critical juncture in South Africa's history, as the country works to transition away from coal-dependent industry. The JETP ensures that the communities which rely on these antiquated energy sources will be part of the shift, thus creating a fair transition framework. By adopting this approach, the JETP is poised to act as a catalyst for new job opportunities, social justice, and poverty alleviation.

With a focus on social equity, the AFD’s policy loan specifically targets support for vital social aspects of the transition, including job creation, poverty reduction, social justice, and equitable access to electricity supply. AFD's support extends beyond financial assistance, as it actively participates in providing technical cooperation and capacity building to South African institutions involved in the energy transition.

Moreover, the AFD loan is tied to a series of critical policy reforms aimed at ensuring a just transition and comes with a robust monitoring and evaluation framework that will oversee these reforms' progress.

South Africa is also buttressed by a formidable governance and institutional structure that includes the Presidential Climate Commission (PCC), a specialized JET-PMU, and an overarching investment plan, which are all fortified by international partnerships with France and several other countries.

Audrey Rojkoff, AFD’s Regional Director for Southern Africa and Country Director for South Africa, emphasized that the AFD and JET partners are committed to harmonizing South Africa’s energy demands with its climate obligations. With meticulous planning and execution, they anticipate achieving positive results throughout the transition.