AfDB commits R42.5bn over the next five years

The African Development Bank will commit $2.8bn (R42.5bn in new financing to SA over the next five years, including a R6bn package to help Eskom switch to using cleaner sources of energy.  

“The African Development Bank believes in SA,” Akinwumi Adesina, the lender’s president, said at an investment conference in Johannesburg on Thursday. “We know SA is bankable.” 

The funding for the state-owned power utility adds to an $8.5bn commitment by the US, the UK, Germany, France and the EU 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 move away from coal, which it uses to supply more than 80% of the country’s  power, is vital to meeting the government’s ambitions to tackle climate change.  

Details of the Eskom funding plan are still being finalised though it won’t add to SA’s debt, Adesina said.  

The AfDB pledge is a major boost for President Cyril Ramaphosa, who initiated a drive four years ago to secure R1.2-trillion of new investment by 2024 to bolster economic growth and stimulate employment. Before Thursday’s gathering, the government said it had secured 152 investment commitments totalling R774bn, 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 R16.4bn expanding its manufacturing capacity;
• An R11.8bn investment by African Rainbow Minerals in two new platinum mines;
• Impala Platinum’s intention to spend R50bn on new capital projects over the next five years;
• Sedibelo Platinum Mines plans to spend R9.4bn on expanding production;
• Waterfall Management Co.’s commitment to invest R18bn in commercial and residential property; and
• An undertaking by Telkom to spend R7bn on telecommunications infrastructure.

The New Development Bank also committed to providing an additional R21.7bn in financing. 

The government is making headway with 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 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.”

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