R7.6bn loan to implement just energy transition concluded

Image source: Chayanit Chankhong – 123RF.com

This innovative policy-based financing, the largest ever on AFD's balance sheet, was developed in close collaboration with the JET Programme Management Unit (JET-PMU) in the Presidency and National Treasury to support the just dimensions of the just energy transition (JET), maximising the social outcomes of the energy transition for local communities.

This loan builds on the €300m public policy loan provided in 2022, bringing France’s total contribution to the JETP to €700m out of the €1bn pledged at COP26 (United Nations Climate Change Conference) in Glasgow.

“The partnership with the AFD presents an opportunity for South Africa to make progress in addressing practical issues of jobs, skills, social support, and governance.

“National Treasury will continue working through the intergovernmental system to integrate JET into our fiscal policy choices. To succeed, coordination across all spheres of government is therefore critical,” National Treasury’s Head of Asset and Liability Management Mmakgoshi Lekhethe said on Thursday.

South Africa’s just energy transition programme is designed to ensure that the livelihoods of communities that are tied to carbon-intensive energy sources, such as coal, are not left behind in the transition to a low-emission economy, and that the energy transition is fair.

A well-managed JET can be a strong driver for new jobs, social justice and poverty reduction as it emphasises the importance of embedding just transition outcomes in policy conditions.

“AFD’s JET public policy loan focuses on social equity and specifically targets support for the social dimensions of the transition, which includes job creation, poverty reduction, social justice and equitable access to electricity supply.

“In addition, the AFD Group is instrumental in providing technical cooperation and capacity building to South African institutions related to JET.

“The loan is linked to a set of policy reforms aimed at ensuring a just transition and AFD is putting a robust monitoring and evaluation framework in place to track the progress of these reforms,” a joint statement by the National Treasury and AFD Groupe said.

South Africa’s JET is supported by a strong governance and institutional framework that includes the Presidential Climate Commission (PCC), a dedicated JET-PMU, a comprehensive investment plan, underpinned by support from international partnerships with France and several other countries.

AFD’s Regional Director for Southern Africa and Country Director for South Africa Audrey Rojkoff said the AFD is working together with JET partners to strike a balance between South Africa’s energy needs and its climate commitments.

“Importantly, we are engaged in addressing the complexity around ensuring that the transition benefits all segments of society with careful planning and implementation. With high levels of commitment, we anticipate positive outcomes throughout the transitioning process,” the statement said.