South Africa and the African Development Bank (AfDB) have signed a US$474.6 million loan agreement to support the implementation of South Africa’s Just Energy Transition (JET). This follows the first policy loan concluded in 2023 for the JET.
Loans from the AfDB and German Development Bank KFW support the implementation of South Africa’s Just Energy Transition.
“This new agreement highlights the importance of South Africa’s partnership with the AfDB in advancing the country’s development agenda. It strengthens our 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 in a statement issued 25 July 2025.
The 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 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.
It offers favourable concessional financial terms with a nominal value of US$474.6 million, 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.
“These include efforts to implement critical reforms in the energy and transport sectors, while advancing the country’s Just Energy Transition goals and meeting foreign currency commitments at lower interest rates.”
A further €500 million loan from KFW
In a subsequent statement, issued 29 July 2025, National Treasury reported that South Africa has been granted a €500 million loan for the implementation of the country’s Just Energy Transition by German Development Cooperation via KFW Development Bank (KFW).
This loan also forms part of South Africa’s third Development Policy Operation.
“KFW’s financing forms part of government’s broader efforts to implement structural reforms that strengthen public institutions, crowd in private investment, and improve service delivery across priority sectors of the economy,” National Treasury said.
This loan agreement builds on the two policy loans concluded in 2022 and 2023, and forms part of Germany’s pledge at COP26 to support South Africa's Just Energy Transition Partnership (JETP). Germany’s three policy loans to date, implemented by KFW, total €1.3 billion and form part of a larger package of JETP projects supported by the German Government via loans, technical assistance and grants.
The Minister of Finance, Enoch Godongwana, highlighted the significance of South Africa’s partnership with Germany and KFW in South Africa’s development agenda. It supports the strengthening of South Africa’s short- and medium-term energy security measures, promoting decarbonisation and enhancing the socio-economic benefits of the energy transition for disadvantaged communities to enable job creation and inclusive economic growth.
The minister also emphasised the need for further policy and institutional reforms in the energy sector to create an enabling environment for the investment required for a just energy transition.
KFW’s Country Director for South Africa, Cornelia Tittmann, said the loan seeks to support the government of South Africa’s continued commitment to reforms in the energy sector, which give effect to South Africa’s climate commitments and enable the private sector to participate, opening new avenues to strengthen economic cooperation between Germany and South Africa.
For more information visit: www.sanews.gov.za
