(Bloomberg) — The African Development Bank will commit 42.5 billion rand ($2.8 billion) in new financing to South Africa over the next five years, including a 6 billion-rand package to help state power utility Eskom Holdings SOC Ltd. transition toward using cleaner sources of energy.
“The African Development Bank believes in South Africa,” Akinwumi Adesina, the lender’s president, said at an investment conference in Johannesburg on Thursday. “We know South Africa is bankable.”
The funding for Eskom adds to an $8.5 billion commitment made by the U.S., U.K., Germany, France and the European Union at the COP26 climate summit in Glasgow in November to help the utility reduce its greenhouse-gas emissions, the 13th-largest in the world. Eskom’s ability to transition away from coal, which it uses to supply more than 80% of South Africa’s power, is key to meeting the country’s ambitions to tackle climate change.
Details of the Eskom funding plan are still being finalized and it won’t add to South Africa’s debt, Adesina said.
The AfDB pledge is a major boost for President Cyril Ramaphosa, who initiated a drive four years ago to secure 1.2 trillion rand ($68 billion) of new investment by 2024 to bolster economic growth and stimulate employment. Prior to Thursday’s gathering, the government said it had secured 152 investment commitments totaling 774 billion rand, with 45 projects at or near completion and 57 under construction.
Additional pledges announced on Thursday include:
- A plan by Ford Motor Co. to spend 16.4 billion rand expanding its manufacturing capacity.
- An 11.8 billion rand investment by African Rainbow Minerals Ltd. in two new platinum mines.
- Impala Platinum Ltd.’s intention to spend almost 50 billion rand on new capital projects over the next five years.
- Sedibelo Platinum Mines plans to spend 9.4 billion rand on expanding production.
- Waterfall Management Co.’s commitment to invest 18 billion rand in commercial and residential property.
- An undertaking by Telkom SA SOC Ltd. to spend 7 billion rand on telecommunications infrastructure.
The New Development Bank also committed to providing an additional 21.7 billion rand in financing to South Africa.
The government is making headway in implementing structural reforms to make it easier to do business, including opening up the freight-rail system to private investors, addressing power shortages, cutting red tape and selling off broadband spectrum to reduce telecommunications costs, Ramaphosa said in his opening address to the conference.
“We meet at a moment when our country, like many others, is facing huge challenges as a result of the Covid-19 pandemic, yet it is also a moment of great opportunity and promise,” he said. “We know that our challenges are many, that they are complex and that they are protracted but we are neither defined by these challenges, nor are we daunted by them. Rather, we are dedicated to surely, steadily and decisively overcoming them.”
(Updates with new investment pledges in second paragraph below story touts)
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