South Africa Secures $475M AfDB Loan for Just Energy Transition

South Africa has secured a $474.6 million loan from the African Development Bank (AfDB) to support its Just Energy Transition (JET), a strategy aimed at decarbonizing the economy and reducing reliance on fossil fuels while promoting inclusive economic growth and job creation. This loan, part of the third Development Policy Operation, involves collaboration with international partners such as the World Bank, KFW Development Bank, Japan International Cooperation Agency, and the OPEC Fund, and offers concessional financial terms including a 15-year maturity and a 3-year grace period. The funding is intended to enhance energy security, accelerate the clean energy transition, and implement structural reforms in South Africa’s energy and transport sectors. Additionally, South Africa’s National Treasury has invited financial market participants to propose innovative funding mechanisms to raise at least $500 million as part of a broader foreign currency borrowing strategy that encourages sustainability-linked features. This approach reflects the country’s commitment to integrating Environmental, Social, and Governance (ESG) goals into its sovereign finance strategy amid evolving global market conditions. The AfDB loan and new borrowing initiatives collectively signal South Africa’s ongoing efforts to advance sustainable infrastructure and energy reforms while managing foreign currency commitments at favorable rates.