SOUTH AFRICA – The African Development Bank (AfDB) is committing US$2.8 billion over the next five years to support private sector investment in South Africa.
The government of Africa’s most developed nation is seeking to foster a rebound from the global pandemic, which temporarily shuttered large swathes of the economy and helped push unemployment rates to record levels.
The support from the AfDB will target agriculture, renewable energy, transport, youth employment, health and vaccine manufacturing, Akinwumi Adesina announced at the South African Investment Conference.
Soon after coming to power in 2018, South Africa’s President Cyril Ramaphosa set a goal to raise $100 billion in new investment over five years to revitalise an economy long plagued by recessions and slow growth.
On Thursday, he said South Africa was two-thirds of the way towards reaching that goal.
“You see opportunities in this country. You see beyond the difficulties and the challenges,” he said during a speech to investors.
“Your investments are making a difference in our country and our local communities.”
AfDB’s support for renewable energy
Akinwumi also announced that the development finance institution is ready to support South Africa’s transition from coal to renewable energy and that a just energy transition facility was being created by the bank to support the country’s transition efforts.
Adesina said the bank, which had previously supported the financing of Eskom’s Medupi coal-fired power station, was now ready to support the utility’s shift to renewable energy, as well as South Africa’s drive towards net-zero emissions.
He reported that the AfDB was preparing to approve US$400 million for Eskom’s own transition to renewables, while it was also supporting public and private solar and wind projects in the country.
“[But] net-zero cannot be achieved with zero financing,” he stressed.
“The African Development Bank, working in partnership with international partners, especially the G7 countries, plans to establish a just energy transition facility that will support South Africa to raise at least US$27 billion to support its energy transition into renewable energy.
“We will do it, Mr President, without South Africa getting into debt,” Adesina said, addressing President Cyril Ramaphosa directly, but without providing specifics.
South Africa, he added, had the potential to be a global energy transition leader and deliver social and employment benefits in the process.
“If you move South Africa away from coal into renewable energy, it will reduce pollution and the negative externalities and impacts of carbon emissions on health and the environment,” he added.
“It is an excellent opportunity to recalibrate the Southern African economy to generate thousands and thousands of green jobs and power new green industries for a more competitive economy.”
Adesina also applauded the US$8.5 billion offer made by the European Union, France, Germany, the UK and the US at COP26 in Glasgow, Scotland, to support South Africa’s just energy transition.
Eskom estimates that some 68 000 MW of mostly new variable renewable-energy capacity would have to be added to cater for the 22 000 MW of coal that the utility would be retiring by about 2035, as well as to cater for any growth in demand.
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