$474.6m funding for SA's energy and infrastructure overhaul

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04-07-2025
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Bizcommunity.com
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South Africa is set to fast-track its just energy transition and infrastructure reforms with the backing of a historic $474.6m loan approved by the African Development Bank Group for the country’s Infrastructure Governance and Green Growth Programme (IGGGP).

This forms part of a broader $2.78bn international financing package, underscoring global confidence in South Africa’s green ambitions.

As Africa’s most industrialised economy and a key regional power hub, South Africa’s progress in modernising its energy and transport sectors is expected to serve as a blueprint for similar transitions across the continent.

The IGGGP represents the second phase of the Bank’s strategic support, following the successful $300m Energy Governance and Climate Resilience Programme approved in 2023.

Structured around three pillars—enhancing energy security through power-sector restructuring, supporting a low-carbon and just transition, and improving transport efficiency—the programme aims to promote sustainable, inclusive growth. It also places strong emphasis on green industrialisation, skills development, and job creation, including support for electric-vehicle manufacturing and green hydrogen production.

Driving critical reforms

Minister of Finance Enoch Godongwana welcomed the funding, stating, “Our country faces the significant challenge of energy shortages, leading to load shedding, as well as significant transport bottlenecks… With your partnership, our government has committed itself to stay the course and implement these critical reforms.”

Recent IMF estimates suggest that South Africa’s Just Energy Transition could raise GDP growth by 0.2 to 0.4 percentage points annually between 2025 and 2030. The programme will also include targeted grant components to promote energy efficiency and rail-sector reform, including vertical separation and investment frameworks for freight and logistics.

Kennedy Mbekeani, African Development Bank Group Director General for Southern Africa, described the programme as more than financing: “It’s a blueprint for Africa’s energy future.”

The IGGGP incorporates robust environmental and social safeguards, with a strong focus on gender and youth empowerment. Women are expected to make up 70% of the beneficiaries of the expanded Social Employment Fund, and youth-targeted training will prepare the next generation for green economy opportunities.

The programme contributes to multiple Sustainable Development Goals, aligning with South Africa’s climate commitments under the Paris Agreement.