South Africa, France and Germany have signed loan agreements for the two European nations to each extend €300 million (R5.3 billion) in concessional financing to South Africa to support efforts to reduce reliance on coal through a just transition to cleaner energy sources.
The French and German public development banks, AFD and KfW, have provided the loans directly to the government through National Treasury.
President Cyril Ramaphosa, French President Emmanuel Macron, and Federal Chancellor of Germany Olaf Scholz, welcomed the agreement at a ceremony during COP27 in Sharm El Sheikh, Egypt.
National Treasury, announcing the agreements in a statement on Wednesday, said that the signing represented a significant milestone in the implementation of the Just Energy Transition Partnership (JETP) announced at COP26 in November 2021. The JETP is a long-term partnership between South Africa, France, Germany, the United Kingdom, the United States and the European Union. The first initiative of its kind, the JETP aspires to support South Africa to accelerate its journey to a low-carbon economy and climate-resilient society.
JETP founding partners, known as the International Partners Group (IPG), last year pledged to mobilise an initial amount of $8.5bn over the next three to five years to advance the partnership.
Andreas Peschke, German Ambassador to South Africa, welcomed the agreement.
“We are very happy about these agreements as they represent a very concrete implementation of our partnership,” Peschke said.
Chargé d’affaires of the French Embassy, Arnaud Roux, said the countries had put their words into action through the signing of the loan agreements.
AFD Regional Director for Southern Africa and Country Director for South Africa, Audrey Rojkoff, said most countries were trying to find a balance between inevitable short-term trade-offs and the long-term perspective of a future where nature and people prospered.
“All partners can make better progress by sharing their experiences, and international institutions have an important role to play by encouraging dialogue. This first public policy loan to South Africa aims precisely at promoting policy dialogue between our countries,” Rojkoff said.
She added that continued research would be essential to fully understand potential climate risks and their impact on the country’s financial system.
National Treasury Acting Director-General, Ismail Momoniat, welcomed the concessional funding.
“While South Africa still requires more support for its Just Transition path considering the scale of the required transition in the context of the current socio-economic challenges of high unemployment, high levels of poverty, and inequality, this funding will assist in addressing the challenge of financing the critical adaptation and mitigation programmes and supporting a resilient, sustainable and inclusive growth,” Momoniat said.
