African Development Bank (AfDB) Group, Board of Directors have approved a $1 billion guarantee program in collaboration with the UK Foreign Commonwealth and Development Office (FCDO), to allow the Bank to increase its lending capacity in support of South Africa’s Just Energy Transition (JET).
The project marks an important partnership between SA, the UK and AfDB. The project will enhance the ability in implementing the just energy transition. The transition will be in a way that is just and socially responsible.
The program will be developed in close collaboration with the government of the Republic of South Africa. Likewise, the program will support projects aligned with South Africa’s JET investment plan.
AfDB Project Initiatives
These project’s include transmission and grid-balancing storage as well asrenewable energy generation. Likewise, energy efficiency, rehabilitation of municipal electricity delivery, green hydrogen and new electric vehicles will be included.
More over, it also includes projects addressing the “just” dimension. This is seen in the Province of Mpumalanga. The province is in the north-eastern part of the country, bordering Swaziland and Mozambique.
The funding approval comes during COP28. The event has witnessed ramping-up of climate finance issues.
AfDB Vice President for Power, Energy, Climate and Green Growth, Dr. Kevin Kariuki reaffirmed AfDB’s leadership in crafting financial solutions.
“This is another innovative operation that reaffirms AfDB’s leadership in crafting financial solutions, to increase access to climate finance for Africa’s low carbon development and net zero ambitions,”
The project will unlock funds for other projects within the remit of South Africa. Likewise, the funds will also help improve a pipeline project.
“FCDO remains committed to the Just Energy Transition Partnership with South Africa, which supports green growth and jobs, improves energy security, and helps South Africa achieve its carbon reduction ambitions as set out in its National Determined Contribution..,”
More so, the guarantee will unlock funds for projects within the remit of South Africa’s recently released Just Energy Transition implementation plan.
At the same time, the project will come alongside the recently significantly increased grant offer from the International Partners Group.
Likewise , some of the funds will help develop an investment project pipeline,” Melinda Bohannon, Foreign Commonwealth and Development Office Director General of Humanitarian and Development stated.
Max Ndiaye, Director of Syndications, Co-financing and Client Solutions, noted previous collaboration between the Bank and FCDO.
He applauded this transaction as further demonstration of the Bank’s continued efforts to heed the G20 recommendations on capital adequacy. Furthermore, the G20 recommendations call for increased collaboration and additional shareholder support for the balance sheet optimization of MDBs.
“By enabling the Bank to increase its lending capacity, this landmark guarantee agreement will greatly support South Africa’s Just Energy Transition,” noted African Development Bank Director General for Southern Africa, Leila Mokaddem.
AfDB currently, remains committed to accompanying South Africa on this important journey.
What Is The Just Energy Transition
Just energy transition refers to the process of shifting from fossil fuel-based energy systems to a more sustainable, low-carbon energy infrastructure.
The concept recognizes that the transition to renewable and clean energy sources can have significant social and economic implications. This is particularly for communities that are dependent on fossil fuel industries or face energy poverty.
Governing bodies around the world are aligning with corporations to enable this just transition.
The signing of the Paris Climate Agreement in 2015, became a framework intended to guide the global energy transition that is both equitable and sustainable.