NEWS

• The African Development Bank approved a $474.6 million loan to help South Africa address power outages under its Green Growth Programme.
• The loan will help South Africa shift to clean energy, support electric vehicles and hydrogen projects, and create jobs for women and youth.

The African Development Bank (AfDB) has approved a $474.6 million loan to South Africa to accelerate critical reforms in the country’s energy infrastructure and transport systems, as part of its Infrastructure Governance and Green Growth Programme. This funding marks the second phase of AfDB’s support for South Africa’s Just Energy Transition (JET). It complements a growing international effort to lift the country from persistent economic constraints.

Announced on Tuesday, July 1, the loan aims to help South Africa tackle long-standing challenges, including chronic power outages (load-shedding), deteriorating rail infrastructure, and severe port congestion, which have constrained the country’s economic performance, especially in key sectors like mining and automotive manufacturing.

The initiative builds on a $300 million programme approved in 2023 that focused on energy governance and climate resilience. The new package adopts a three-pronged strategic approach:

1. Power Sector Restructuring to enhance energy security and grid stability, particularly through reforms within Eskom and improved private sector participation.
2. Low-Carbon Transition measures to support renewable energy, energy efficiency, green hydrogen, and electric vehicle manufacturing.
3. Transport Sector Reforms focus on rail sector modernisation, vertical unbundling of operations, and port decongestion.

South Africa’s Finance Minister, Enoch Godongwana, welcomed the funding, describing it as pivotal to the country’s recovery and structural transformation: “Our country faces the significant challenge of energy shortages, leading to load-shedding and significant transport bottlenecks. With AfDB’s partnership, our government has committed itself to staying the course and implementing these critical reforms while endeavouring to achieve our international commitments on climate change and our JET objectives.”

This loan is part of a coordinated international financing package now totalling $2.78 billion, which includes $1.5 billion from the World Bank, €500 million from Germany’s KfW, up to $200 million from the Japan International Cooperation Agency (JICA) and $150 million from the OPEC Fund for International Development

The AfDB noted that its programme is not just financial support, but a blueprint for systemic transformation. According to Kennedy Mbekeani, the Bank’s Director-General for Southern Africa:

“This is more than financing, it’s a blueprint for Africa’s energy future. South Africa’s green transition leadership can potentially serve as a model for the continent.”

The programme embeds a comprehensive social and environmental framework, emphasising women and youth empowerment. A Social Employment Fund will allocate 70% of opportunities to women, while targeted youth training initiatives will align with green sector job creation.

Governance reforms, skills development in renewable energy, and support for small and women-led businesses are central to the initiative, enhancing local job creation and economic resilience.

South Africa holds the G20 presidency and is revising its Nationally Determined Contributions (NDCs) under the Paris Agreement to reduce emissions to 350–420 million tonnes CO₂e by 2030. The AfDB’s Green Growth Programme supports progress toward multiple UN Sustainable Development Goals, notably:

• SDG 7 – Affordable and Clean Energy
• SDG 8 – Decent Work and Economic Growth
• SDG 9 – Industry, Innovation and Infrastructure
• SDG 13 – Climate Action

According to the International Monetary Fund (IMF), the successful implementation of the just energy transition could boost GDP growth by 0.2 to 0.4 percentage points annually between 2025 and 2030.

While the financing signals strong international backing, the success of the reforms depends on implementation. Key risks include Eskom’s ability to stabilise the grid, integrating private renewable investments, and overcoming institutional inertia in state-owned rail and transport entities after years of underinvestment.

If effectively implemented, the AfDB-supported reforms could deliver stronger growth, reduced emissions, and improved trade integration across the Southern African Development Community (SADC)—making South Africa a continental leader in clean energy and infrastructure transformation.