Agence Française de Développement Concludes Negotiations For The R7.6bn (400 M€) Public Policy Loan For SA’s Just Energy Transition

Marking its 30-year anniversary of collaboration with South Africa, Agence Française de Développement (AFD) has concluded negotiations for a R7.6 billion loan for the implementation of the country’s Just Energy Transition Plan (JETP). This innovative policy-based financing, the largest ever on AFD’s balance sheet, was developed in close collaboration with the JET Programme Management Unit (JET-PMU) in the Presidency and National Treasury (NT) to support the just dimensions of the JET, maximising the social outcomes of the energy transition for local communities.

This loan builds on the €300 million public policy loan provided in 2022, bringing France’s total contribution to the JETP to €700 million of the €1 billion pledged at COP26 in Glasgow.

According to South Africa’s Presidential Climate Commission (PCC), the entity entrusted with overseeing and facilitating the JET, the programme is designed to ensure that the livelihoods of communities that are tied to carbon-intensive energy sources, such as coal, are not left behind in the transition to a low-emission economy, and that the energy transition is fair. A well-managed JET can be a strong driver for new jobs, social justice and poverty reduction as it emphasise the importance of embedding just transition outcomes in policy conditions.

AFD’s JET public policy loan focuses on social equity and specifically targets support for the social dimensions of the transition, which include job creation, poverty reduction, social justice and equitable access to electricity supply. In addition, the AFD Group is instrumental in providing technical cooperation and capacity building to South African institutions related to JET.

The loan is linked to a set of policy reforms aimed at ensuring a just transition and AFD is putting a robust monitoring and evaluation framework in place to track the progress of these reforms. South Africa’s JET is supported by a strong governance and institutional framework that includes the PCC,a dedicated JET-PMU, a comprehensive investment plan, underpinned by support from international partnerships with France and several other countries.

Deputy Minister of Finance, Dr David Masondo, highlighted the importance of implementing the energy transition in a just and inclusive manner. “The partnership with AFD presents an opportunity for South Africa to make progress in addressing practical issues of jobs, skills, social support, and governance. National Treasury will continue working through the intergovernmental system to integrate JET into our fiscal policy choices. To succeed, coordination across all spheres of government is therefore critical”.

Rémy Rioux, Chief Executive Officer of AFD, said that AFD is working together with JET partners to strike a balance between South Africa’s energy needs and its climate commitments. “30 years after opening its Johannesburg office, AFD is proud to renew and strengthen its long-term support for a just and inclusive energy transition, with a focus on social equity.  Importantly, we are committed to addressing the complexities of ensuring that the transition benefits all segments of society through careful planning and implementation.”