Pretoria: South Africa and the African Development Bank (AfDB) have signed a $474.6 million loan agreement to bolster the Just Energy Transition (JET) initiative. This financial support is intended to facilitate the country’s shift towards sustainable energy practices and enhance energy security.

According to South African Government News Agency, the loan marks the continuation of efforts following the first policy loan finalized in 2023. This collaboration underscores the significance of South Africa’s alliance with the AfDB in promoting its development goals. The agreement aims to improve energy security, hasten economic decarbonization, and boost socio-economic advantages, thereby supporting inclusive growth and job creation.

The loan is part of the third Development Policy Operation, which also includes contributions 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). These entities are working together to implement structural reforms that will improve the efficiency, resilience, and sustainability of South Africa’s infrastructure services.

The loan is offered on favorable concessional financial terms, with a total nominal value of $474.6 million. It has a maturity period of 15 years and includes a 3-year grace period. The interest rate is set at a daily Secured Overnight Financing Rate (SOFR) plus 1.22%.

The National Treasury has expressed gratitude to the AfDB for its ongoing partnership and support in achieving South Africa’s development objectives. This includes executing essential reforms in the energy and transport sectors while advancing the country’s Just Energy Transition goals and managing foreign currency obligations at reduced interest rates.