The Board of Directors of the African Development Bank Group (AfDB) has approved a $474.6 million loan for the Infrastructure Governance and Green Growth Programme (IGGGP), marking a major step towards accelerating South Africa’s transition to a sustainable, low-carbon economy. This milestone financing package forms part of a broader global initiative supporting the country’s Just Energy Transition (JET) strategy, reinforcing its commitment to clean energy, climate resilience, and inclusive economic growth.

Three pillars of transformation 

The IGGGP represents Phase Two of the AfDB’s strategic support to South Africa’s energy transition. It builds on the success of the $300 million Energy Governance and Climate Resilience Programme, launched in 2023. That earlier phase focused on strengthening the country’s financial and energy governance structures, enhancing climate resilience, and expanding renewable energy capacity.

The IGGGP aims to take that foundation further by addressing systemic challenges in energy and transport sectors and by fostering a green, just, and inclusive transformation. Structured around three strategic pillars, the programme will:

• Enhance energy security through restructuring of the power sector.
• Support a low-carbon, just transition aligned with climate goals.
• Improve transport and logistics efficiency, enabling long-term economic growth.

South Africa’s Minister of Finance, Enoch Godongwana, welcomed the AfDB’s support, recognizing the partnership as vital to overcoming persistent national challenges: “Our country faces the significant challenge of energy shortages, leading to loadshedding, as well as significant transport bottlenecks, which have been detrimental to growing our economy and achieving our developmental aspirations.”

Socioeconomic Benefits and Global Impact

The IGGGP places strong emphasis on green industrialization, skills development, and job creation, including support for electric vehicle manufacturing and green hydrogen production. Recent estimates from the IMF show that South Africa’s Just Energy Transition could boost the country’s GDP growth by 0.2 to 0.4 percentage points annually between 2025 and 2030.

The initiative incorporates comprehensive environmental and social safeguards, with a particular focus on gender and youth empowerment. Women will constitute 70% of the beneficiaries of the expanded Social Employment Fund, and dedicated youth skills programmes will equip the next generation for emerging opportunities in the green economy.

The success of the IGGGP will contribute to several United Nations Sustainable Development Goals, including affordable and clean energy (SDG 7), decent work and economic growth (SDG 8), industry, innovation, and infrastructure (SDG 9), and climate action (SDG 13).

“This approval represents more than financing — it's a blueprint for Africa's energy future,” said Kennedy Mbekeani, African Development Bank Group’s Director General for Southern Africa. "South Africa's success in building a just, green, and inclusive energy system demonstrates that sustainable development and economic growth can go hand in hand."

As an advanced economy in Africa and a regional power hub, South Africa's success in its energy transition could catalyze similar transformations across the continent. Its experience integrating renewable energy, modernizing its grid, and implementing just transition policies will provide valuable lessons for other African nations pursuing sustainable development goals.

Part of a global financing effort

The AfDB’s support is part of a larger $2.78 billion international financing package that reflects the global significance of South Africa’s energy transition. Other contributors include:

• $1.5 billion from the World Bank
• €500 million from Germany’s KfW
• Up to $200 million from Japan’s JICA
• An expected $150 million from the OPEC Fund.

B2EU closely follows major funding efforts by global financial institutions. Keep an eye on our website for the latest news.