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UK supports AfDB with $1 billion for South Africa’s Energy Transition

The African Development Bank Group (AfDB) has secured $1 billion in guarantee from the United Kingdom to increase its lending capacity in support of South Africa’s Just Energy Transition (JET).

In a statement, the AfDB stated that the programme, in collaboration with UK’s Foreign Commonwealth and Development Office (FCDO) and the South African government, will support projects aligned with South Africa’s JET investment plan, such as transmission and grid-balancing storage, renewable energy generation, energy efficiency, rehabilitation of municipal electricity delivery, green hydrogen, new electric vehicles. It also includes projects addressing the “just” dimension, notably in the Province of Mpumalanga, in the north-eastern part of the country, bordering Swaziland and Mozambique.

It noted that the approval, coming during COP28, where ramping-up climate finance was an issue, was timely. According to the AfDB’s Vice President for Power, Energy, Climate and Green Growth, Dr. Kevin Kariuki, “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.”

Also speaking, the UK’s FCDO Director General of Humanitarian and Development, Melinda Bohannon, stated,” 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. 

“This guarantee will unlock funds for projects within the remit of South Africa’s recently released Just Energy Transition implementation plan. This comes alongside the recently significantly increased grant offer from the International Partners Group, and we are using some of those grants to help develop an investment project pipeline.”

In response, the Deputy-Director General for Asset and Liability Management in South Africa’s National Treasury, Mmakgoshi Lekhethe, said, “We are pleased with the approval by the AfDB Board of the guarantee framework that will increase South Africa’s access to funding from the Bank by $1 billion. This marks an important partnership between our government, the UK and AfDB to enhance our ability to implement South Africa’s just energy transition in a way that is just and socially responsible.

“We look forward to working closely with the AfDB on the preparation and financing of a pipeline of programs and projects under our just transition priority areas, including those identified in the JET Implementation Plan. As a development bank with vast experience in just transition in the continent, the AfDB is an ideal partner for us on this important initiative.”

By enabling the Bank to increase its lending capacity, this landmark guarantee agreement will greatly support South Africa’s Just Energy Transition, noted AfDB’s Director General for Southern Africa, Leila Mokaddem.

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