German bank grants South Africa R10.4 billion loan for energy transition
South Africa has received a €500 million loan to support the implementation of its Just Energy Transition (JET) plan.
The German Cooperation, through KFW Development Bank, has granted South Africa a €500 million (R10.4 billion) loan to implement the country’s Just Energy Transition (JET) plan.
The loan forms part of South Africa’s third Development Policy Operation, with participation from the World Bank, African Development Bank, Japan International Cooperation Agency, and the OPEC Fund.
Focus on the energy sector
“It supports structural reforms to enhance the efficiency, resilience and sustainability of the country’s infrastructure services, with a specific focus on the energy sector and climate mitigation.
“KFW’s financing forms part of government’s broader efforts to implement structural reforms that strengthen public institutions, crowd in private investment, and improve service delivery across priority sectors of the economy,” National Treasury said on Monday.
This loan agreement builds on the two policy loans concluded in 2022 and 2023, and forms part of Germany’s pledge at COP26 to support South Africa’s Just Energy Transition Partnership (JETP).
Germany’s three policy loans, implemented by KFW, total €1.3 billion and form part of a larger package of JETP projects supported by the German Government via loans, technical assistance and grants.
Development agenda
“The Minister of Finance, Enoch Godongwana, [has] highlighted the significance of South Africa’s partnership with Germany and KFW that remains critical to South Africa’s development agenda and marks a significant step towards strengthening South Africa’s short- and medium-term energy security measures, promoting decarbonisation and enhancing the socio-economic benefits of the energy transition for disadvantaged communities, thereby enabling inclusive economic growth and fostering job creation.
“The Minister also emphasised the need for further policy and institutional reforms in the energy sector to create an enabling environment for the investment required for a just energy transition,” National Treasury said.
KFW’s Country Director for South Africa, Cornelia Tittmann, said the loan supports the South African government’s ongoing energy sector reforms, which advance the country’s climate commitments, encourage private sector involvement, and create new opportunities to deepen economic cooperation between Germany and South Africa.