AfdB to fund Eskom climate change transition

The African Development Bank (AfdB) said it would extend a US$2.8-billion facility to South Africa over the next five years, part of which is intended to fund Eskom’s transition to a low emissions economy.

AfDB president Akinwumi Adesina made the pledge at the South Africa Investment Conference in Sandton. The facility will fit well with the debt funding plan of the National Treasury, which is to increase borrowings from international finance institutions, which offer loans at concessional rates.

Of the US$2.8-billion facility, US$400 million was earmarked for Eskom, said Adesina, as it transitions to renewable energy.

The AfDB is part of consortium of international finance institutions which in November at the COP26 conference on climate change pledged to help raise US$8.5 billion to establish a just energy transition facility.

Announcing the facility, Adesina said: "This financing will support public and private sector investments in priority areas of agriculture, renewable energy, transport, youth employment, health, vaccines manufacturing, among others. We know South Africa is bankable."

The bank is already involved in financing 23 projects in South Africa with a total commitment of about US$4.5 billion in financing. Since 1997, the bank has invested nearly US$7 billion in the country in energy and infrastructure.

South Africa has an International Monetary Fund (IMF) loan of US$4.3 billion, a World Bank loan of US$750 million and two US$1-billion loans from the New Development Bank. -Fin24/Bloomberg