South Africa has secured a $582 million loan from Germany to help finance its transition away from fossil fuel dependence, Bloomberg reported this Monday (28 July).
The German Society for International Cooperation (GIZ) — via the state-owned development bank KfW — will provide the 13-year loan with a three-year grace period at a fixed interest rate of 4.31%, according to a statement released by South Africa’s National Treasury.
The agreement builds on two previous loans signed in 2022 and 2023 and forms part of Germany’s pledge made at the 26th Conference of the Parties (COP26) to support South Africa’s energy transition efforts.
Altogether, Berlin’s loans to Pretoria, implemented by KfW, now total $1.5 billion. These loans are part of a broader Just Energy Transition Partnership project — an $8.3 billion climate finance deal signed in 2021 with some of the world’s richest nations, including France and Germany.
South Africa currently relies on coal for about 80% of its electricity production, making it the most carbon-intensive economy among the G20 nations. Other partners in this latest loan include the World Bank, African Development Bank, Japan International Cooperation Agency, and the OPEC Fund for International Development, according to the Treasury.
The initiative supports short- and medium-term energy security measures and promotes decarbonization, said Finance Minister Enoch Godongwana.
Source: Diário Económico
