South Africa, France and Germany have signed loan agreements for the two European nations to each extend €300 million 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 French and German public development banks, AFD and KfW, have provided the loans directly to the South African government via National Treasury.
The financing agreements were acknowledged and welcomed by President Cyril Ramaphosa, Emmanuel Macron, President of the French Republic and Olaf Scholz, Federal Chancellor of the Federal Republic of Germany, at a ceremony held during the 27th United Nations Climate Change Conference (COP27) currently taking place in Sharm El Sheikh, Egypt.
In a statement, Treasury says 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 longterm partnership between South Africa, France, Germany, the United Kingdom, the United States, and the European Union. 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 $8.5 billion over the next three to five years to advance the partnership.
Andreas Peschke, German Ambassador to South Africa, said they are happy about these agreements as they represent a very concrete implementation of the partnership.
“South Africa continues to be dependent on coal to produce most of its electricity and the coal sector remains significant to the country’s national economy and the livelihood of several communities.”
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Ismail Momoniat, Acting Director-General of the National Treasury said that the South
African Government welcomes concessional funding from AFD and KfW, which forms part of
support for South Africa’s Just Transition.
“While South Africa still requires more support for its Just Transition path considering the scale of the required transition in the context of the current socio-economic challenges of high unemployment, high level of poverty and inequality, this funding will assist in addressing the challenge of financing the critical adaptation and mitigation programmes and supporting a resilient, sustainable, and inclusive growth.”
Treasury says the funding will also provide the 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. These loans are concessional and contribute to government’s efforts to mitigate rising government debt costs.
