SA, AfDB sign $474.6m loan agreement for Just Energy Transition

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The loan agreement with the AfDB follows the first policy loan concluded in 2023 to support South Africa's Just Energy Transition.

“This new agreement highlights the importance of South Africa’s partnership with the AfDB in advancing South Africa’s development agenda.

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"It strengthens efforts to improve energy security measures, accelerate the decarbonisation of the economy, and enhance the socio-economic benefits of the energy transition, enabling inclusive economic growth and fostering job creation,” National Treasury said.

This loan is part of the third Development Policy Operation, which includes participation from the World Bank, KFW Development Bank, Japan International Cooperation Agency, and the Organisation of the Petroleum Exporting Countries Fund for International Development (OPEC Fund) to support structural reforms to enhance the efficiency, resilience, and sustainability of the country’s infrastructure services.

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It offers favourable concessional financial terms at a nominal value of $474.6m with a maturity of 15 years and a three-year grace period at an interest rate of a daily Secured Overnight Financing Rate (SOFR) plus 1.22%.

“The National Treasury wishes to express its appreciation to the AfDB for its continued partnership and support of South Africa’s development objectives.

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“This includes efforts to implement critical reforms in the energy and transport sectors, while also advancing the country’s Just Energy Transition goals and meeting foreign currency commitments at lower interest rates.”