Latest news with #InfrastructureGovernanceandGreenGrowthProgramme
Arabian Post
02-07-2025
- Business
- Arabian Post
Africa's Infrastructure Boost: AfDB Commits $475m to South Africa
South Africa will receive a $474.6 million loan from the African Development Bank to overhaul its transport systems and energy infrastructure, the Bank announced on Tuesday. The financing, part of a broader international development package, aims to tackle persistent power outages, outdated rail networks and port congestion that have hampered economic performance. The loan is being deployed under the Infrastructure Governance and Green Growth Programme, the Bank's second phase in support of South Africa's just energy transition. It builds on a previous $300 million initiative approved in 2023, which focused on energy governance and climate resilience. The funding structure incorporates three strategic pillars: restructuring the power sector to bolster energy security, advancing the shift to a low-carbon economy, and enhancing transport efficiency—particularly through rail reforms. It also supports green industrialisation and lays the groundwork for electric vehicle manufacturing and green hydrogen production. ADVERTISEMENT Finance Minister Enoch Godongwana described the loan as pivotal. 'Our country faces the significant challenge of energy shortages, leading to loadshedding, as well as significant transport bottlenecks,' he said. 'With [AfDB's] partnership, our government has committed itself to stay the course and implement these critical reforms…while endeavouring to achieve our international commitments on climate change and our JET objectives.' This funding arrives as part of a coordinated international financing package. Alongside the AfDB loan, South Africa secured a $1.5 billion World Bank loan the previous month. Contributions also include €500 million from Germany's KfW, up to $200 million from the Japan International Cooperation Agency, and $150 million from the OPEC Fund for International Development. For over a decade, South Africa's economy has been constrained by electricity reliability issues, crumbling rail infrastructure and congested ports—challenges that have negatively impacted its mining and automotive sectors. The country's status as the continent's most industrialised economy amplifies the effects of such structural bottlenecks. The AfDB has emphasised that reforms will include energy-efficiency initiatives and rail restructuring, such as vertical separation of rail operations and improved investment frameworks. A grant component within the package supports energy efficiency and targeted reforms in the rail sector. Kennedy Mbekeani, Southern Africa's Director‑General for the Bank, said the programme is 'more than financing—it's a blueprint for Africa's energy future,' noting that South Africa's leadership in the green transition could serve as a model for other nations. Macro-economic projections suggest the just energy transition could lift GDP growth by between 0.2 and 0.4 percentage points annually between 2025 and 2030, according to the International Monetary Fund. The initiative is embedded in a comprehensive social and environmental framework. Women and youth empowerment are core to its social employment fund, with 70 percent of beneficiaries earmarked for women. Dedicated youth training programmes aim to build skills aligned with green industries. Governance reforms and green job initiatives, including skills development in renewable energy sectors, are designed to stimulate local employment and support small business involvement—especially for women-led enterprises and youth entrepreneurs. The broader global context highlights the strategic nature of this support: South Africa currently holds the G20 presidency, and its updated Nationally Determined Contributions under the Paris Agreement aim for emissions of 398–510 million tons CO₂ equivalent by 2025, reducing further to 350–420 million tons by 2030. By backing the Green Growth Programme, the AfDB and international partners are reinforcing the country's commitments across multiple United Nations Sustainable Development Goals—especially SDG 7, SDG 8, SDG 9, and SDG 13. With this tranche, total coordinated financing now reaches $2.78 billion, underscoring an intensifying global commitment to South Africa's structural economic transformation. Should the reforms in energy and transport succeed, the country could see stronger growth, reduced emissions and enhanced regional trade integration across the Southern African Development Community. Despite the promise, successful delivery remains contingent on effective implementation. Structural challenges—such as Eskom's ability to manage grid stability, avoid load‑shedding and coordinate with private sector renewable developments—will be critical. Equally, rail reforms must overcome years of underinvestment and institutional inertia within state-owned entities.
IOL News
01-07-2025
- Business
- IOL News
African Development Bank approves R8. 4bn million for SA's green growth programme
Cooling towers at an Eskom coal-based power station in Duhva. The AfDB funding, designed to bolster the country's transition to a low-carbon economy, is a vital component of South Africa's ongoing efforts to enhance its energy landscape amidst pressing challenges. Image: Mike Hutchings/Reuters The African Development Bank (AfDB) Group has approved a $474.6 million (around R8.4 billion) loan earmarked for South Africa's Infrastructure Governance and Green Growth Programme (IGGGP). This funding, designed to bolster the country's transition to a low-carbon economy, is a vital component of South Africa's ongoing efforts to enhance its energy landscape amidst pressing challenges. The IGGGP represents the second phase of the bank's strategic backing for a Just Energy Transition in South Africa, following the success of the earlier $300 million Energy Governance and Climate Resilience Programme, approved in 2023. This prior initiative succeeded in reinforcing financial stability whilst expanding renewable energy capacity throughout the nation. Structured around three crucial pillars—transforming energy security through power sector restructuring, promoting a low-carbon and just transition, and enhancing transport efficiency—the IGGGP is poised to catalyse South Africa's green transformation and drive inclusive, resilient growth. Finance Minister Enoch Godongwana heralded the bank's assistance, emphasising the critical nature of this partnership. 'Our country faces the significant challenge of energy shortages, leading to loadshedding, as well as significant transport bottlenecks, which have been detrimental to growing our economy and achieving our developmental aspirations,' Godongwana said. 'With your partnership, our government has committed itself to stay the course and implement these critical reforms in the energy and transport sectors, while endeavoring to achieve our international commitments on climate change and our JET objectives.' The IGGGP is not only about transforming the energy sector; it also focuses on fostering green industrialisation, creating jobs, and developing skills, specifically by supporting initiatives in electric vehicle manufacturing and green hydrogen production. According to recent International Monetary Fund estimates, South Africa's Just Energy Transition could enhance the country's GDP growth by between 0.2 and 0.4 percentage points annually from 2025 to 2030. 'This approval represents more than financing — it's a blueprint for Africa's energy future,' said Kennedy Mbekeani, AfDB's director general for Southern Africa. 'South Africa's success in building a just, green, and inclusive energy system demonstrates that sustainable development and economic growth can go hand in hand.' The financing package includes targeted grant components aimed at promoting energy efficiency initiatives and advancing rail sector reforms. Key priorities will focus on accelerating vertical separation and establishing an investment framework designed to revitalise South Africa's freight and logistics systems. This, in turn, is expected to enhance the transport sector's competitiveness and foster regional integration, which is critical for economic growth across the Southern African Development Community. As one of Africa's more advanced economies and a pivotal regional power, South Africa's triumph in its energy transition could inspire similar shifts continent-wide. Its experience in integrating renewable energy, modernising its grid, and implementing effective transition policies will prove invaluable for other African nations exploring sustainable development avenues. Moreover, the initiative includes comprehensive environmental and social safeguards, with a pronounced emphasis on gender and youth empowerment. Women are projected to constitute 70% of the beneficiaries of the expanded Social Employment Fund, while specialised youth skills programmes will prepare the younger generation for forthcoming opportunities in the burgeoning green economy. The success of the IGGGP aligns with multiple United Nations Sustainable Development Goals, including affordable and clean energy (SDG 7), decent work and economic growth (SDG 8), industry, innovation, and infrastructure (SDG 9), and climate action (SDG 13). This landmark financing from the AfDB is part of a robust international financing package amounting to $2.78bn, which includes $1.5bn from the World Bank, €500 million from Germany's KfW, up to $200m from Japan's JICA, and an anticipated $150m from the OPEC Fund. Such coordinated funding exemplifies the global importance of South Africa's energy transition, particularly in light of its G20 presidency. The programme is in line with the nation's updated Nationally Determined Contributions under the Paris Agreement, which aim for greenhouse gas emissions reduction to between 398–510 million tons of CO₂ equivalent by 2025 and 350–420 million tons by 2030. BUSINESS REPORT
