South Africa is taking another significant step in its journey towards a low-emissions economy with the recent finalisation of a groundbreaking R7.6 billion loan to advance the country’s Just Energy Transition Plan (JETP), thanks to the Agence Française de Développement (AFD).
As I reflect on this, I can’t help but feel hopeful. This isn’t just a loan; it’s an unprecedented policy-based financing collaboration, the largest AFD has ever undertaken. Working closely with the JET Programme Management Unit (JET-PMU) in the Presidency and National Treasury, this funding seeks to prioritise the “just” aspect of our energy transition, ensuring that local communities are front and centre in this transformative shift.
AFD’s commitment builds on an earlier €300 million loan provided in 2022, boosting France’s total contribution to €700 million out of the €1 billion pledged during COP26 in Glasgow. This deep partnership with France offers South Africa a real opportunity to address the challenging issues of jobs, skills, social support, and governance within the energy transition. As Mmakgoshi Lekhethe, Head of Asset and Liability Management at the National Treasury, said, “The partnership with the AFD presents an opportunity for South Africa to make progress in addressing practical issues of jobs, skills, social support, and governance.”
For me, what’s so exciting about the Just Energy Transition is its holistic approach. We’re not just looking to cut emissions; we’re aiming to protect the communities that rely heavily on carbon-intensive energy sources, like coal, ensuring they’re not left behind in the move to a greener economy. It’s about fairness, about making sure the benefits of change are accessible to all. With the right strategy, this transition could spark job creation, advance social justice, and even alleviate poverty.
AFD’s latest loan is unique because it places social equity at the core of the energy transition. In their words, “AFD’s JET public policy loan focuses on social equity and specifically targets support for the social dimensions of the transition, which includes job creation, poverty reduction, social justice, and equitable access to electricity supply.” This approach ensures that our energy transition prioritises the people most affected by it.
But beyond the funding, AFD is stepping up with technical support and capacity-building for South African institutions to ensure our JET goals are not only ambitious but achievable. This loan is tied to key policy reforms, and AFD has committed to a robust monitoring framework to ensure these reforms lead to meaningful change.
South Africa’s JET strategy is grounded in a strong governance structure, including the Presidential Climate Commission (PCC), the dedicated JET-PMU, and a detailed investment plan. With support from international partners like France, we’re well-positioned to push forward.