SA gets R10.7bn loan agreements

EGYPT - South Africa has secured loan agreements of €600 million (R10.7 billion) from France and Germany to aid its transition away from coal and adopt cleaner energy sources like solar PV and wind.

The agreements are part of the initial US$8.5 billion (R153 billion) that was pledged to SA by the International Partners Group (IPG) – UK, US, France, Germany and EU and it signals that the pledge has moved into the flow of real money.

It’s been an eventful few days for the country at COP27 in Sharm ElSheikh, Egypt.

The UN climate talks started on Sunday, and South Africa’s just energy transition plan has been in the spotlight.

President Cyril Ramaphosa handed over the country’s R1.5 trillion investment plan for the next five years to the IPG on Monday. The IPG saying that it endorses the plan. The US$8.5 billion it has pledged, however, is a fraction of what is needed for the full investment plan.

The R10.6 billion concessional loans (which means the country can secure loans at better rates than what it can require at markets) are from France and Germany’s development banks Agence Française de Développment (AFD) and KfW, respectively.

During a panel discussion on financing the just energy transition, head of the Presidential Climate Finance Task

Team, Daniel Mminele, said that the monies from the loans would likely flow ‘early next year’. He added that the next step is to ‘progress’ some of the other financial discussions that need to be finalised.

The big push after COP27 is to work on an implementation plan that will have accountability and governance structures in place. “That is something we want to do without delay, and during the first quarter of next year,” he said.