KEY POINTS
- South Africa secures $418.99 million AFD loan for just energy transition.
- Loan supports job creation and social equity.
- Strong governance ensures inclusive and sustainable energy transformation.
South Africa has taken a significant step toward achieving its low-emissions economy goals by finalizing a R7.6 billion ($418.99 million) loan agreement with the Agence Française de Développement (AFD). The milestone is part of the country’s broader Just Energy Transition Plan (JETP), aimed at balancing environmental commitments with social equity.
The policy-based loan, the largest of its kind on AFD’s balance sheet, was developed in partnership with South Africa’s JET Programme Management Unit (JET-PMU) in the Presidency and the National Treasury. Its focus is to enhance the social outcomes of transitioning from carbon-intensive energy systems, ensuring that local communities dependent on such sectors are not left behind.
France’s expanding commitment
According to Zawya, the new loan builds on a €300 million($316.44 million) public policy loan provided by France in 2022, bringing the country’s total contribution to South Africa’s JETP to €700 million($738.36 million) of the €1 billion($1.06 billion) pledged at the COP26 climate summit in Glasgow. This funding reinforces France’s commitment to supporting South Africa’s equitable energy transition.
“The partnership with the AFD presents an opportunity for South Africa to address critical issues such as jobs, skills, social support, and governance,” said Mmakgoshi Lekhethe, Head of Asset and Liability Management at the National Treasury. “Coordination across all spheres of government is essential to integrate JET into fiscal policy choices effectively,” she added.
Social equity at its core
South Africa’s JETP is structured to ensure a fair transition, focusing on communities heavily reliant on coal and other carbon-intensive industries. The program emphasizes the creation of new jobs, poverty reduction, and social justice, with equitable access to electricity as a key priority.
“AFD’s public policy loan is designed to address the social dimensions of the energy transition, targeting job creation and poverty reduction while embedding social justice at its core,” noted a joint statement from the National Treasury and AFD Groupe. The statement highlighted that AFD is also providing technical cooperation and capacity-building support to South African institutions managing the transition.
Governance and policy reforms
The loan is tied to a set of policy reforms aimed at ensuring a just transition. A robust monitoring and evaluation framework will be implemented to track the progress of these reforms. South Africa’s transition efforts are guided by strong governance mechanisms, including the Presidential Climate Commission (PCC) and a dedicated JET-PMU, supported by international partnerships.
Audrey Rojkoff, AFD’s Regional Director for Southern Africa, emphasized the importance of balancing South Africa’s energy needs with its climate goals. “We are committed to ensuring the transition benefits all segments of society through careful planning and implementation,” Rojkoff said.
A Roadmap for sustainable development
The funding underscores South Africa’s resolve to meet its climate commitments while fostering economic and social resilience. By integrating social equity into energy policy, the JETP serves as a model for other nations grappling with the complexities of energy transitions.
As South Africa progresses in its journey toward a sustainable future, this partnership with AFD marks a pivotal step in ensuring that economic transformation is both inclusive and equitable.
