The African Development Bank has secured a $1 billion guarantee from the United Kingdom to increase lending towards South Africa’s effort to transition towards renewable energy and build a greener economy.
According to a press statement made available to PUNCH Online on Sunday, the backing will allow the bank to “increase its lending capacity in support of South Africa’s Just Energy Transition (JET),” investing in projects like clean energy, grid improvements, electric vehicles, and green hydrogen production, the bank said.
A portion will also go towards the “just transition” for communities in South Africa’s Mpumalanga province reliant on coal to ensure the switch does not devastate livelihoods.
“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,” the bank’s Vice President for Power, Energy, and Climate, Dr. Kevin Kariuki, stated.
Coming amid the COP28 climate summit, the timely move was hailed by South Africa’s National Treasury as an “important partnership” allowing the implementation of the country’s energy transition “in a way that is just and socially responsible.”
Director General Leila Mokaddem said the guarantee will “greatly support South Africa’s Just Energy Transition,” keeping the bank “committed to accompanying South Africa on this important journey.”
With many African countries balancing development needs with pressure to curb emissions, the continent is seeking over $250 billion annually by 2030 in external financing for climate action.
Punch Online reports that this guarantee from the UK and innovative financing solutions from institutions like the AfDB aim to help bridge the considerable climate financing gap.
