By Lehlohonolo Lehana.
The African Development Bank (AfDB) approved $474.6 million loan to support South Africa’s Infrastructure Governance and Green Growth Program (IGGGP), the bank said on Tuesday.
This IGGGP is the second phase of the bank’s strategic support for South Africa’s just energy transition (JET).
It builds on the previous $300-million Energy Governance and Climate Resilience Programme, approved in 2023, which delivered key reforms that bolstered finacial stability and increased renewable-energy capacity.
The African Development Bank said in a statement that its financing aimed to promote energy efficiency and rail reforms, among other things.
It said its support was part of an international financing package for South Africa that also includes the World Bank loan, 500 million euros ($590.75 million) from German development bank KfW, up to $200 million from the Japan International Cooperation Agency and $150 million from the OPEC Fund for International Development.
The IGGGP is designed to accelerate South Africa’s green transformation and promote inclusive and resilient growth. It is structured around three interconnected pillars:
- enhancing energy security through power sector restructuring;
- supporting a low-carbon and just transition; and
- improving transport efficiency.
“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.
“With [the AfDB’s] partnership, our government has committed itself to stay the course and implement these critical reforms in the energy and transport sectors, while endeavouring to achieve our international commitments on climate change and our JET objectives,” Finance Minister Enoch Godongwana said.
The IGGGP also places strong emphasis on green industrialisation, skills development, and job creation, including support for electric vehicle manufacturing and green hydrogen production.
Recent estimates from the International Monetary Fund show that South Africa’s JET could boost the country’s GDP growth by 0.2 to 0.4 percentage points a year between 2025 and 2030.