African Development Bank offers SA a financing deal to raise $41bn

The African Development Bank (AfDB) has suggested a plan for SA that will help the country use the $8.5bn  (about R150bn) in climate financing pledged by some of the world’s richest nations to raise more funds. 

The AfDB has recommended SA parks the funds in a special purpose vehicle (SPV), said bank president Akinwumi Adesina. The SPV, which can seek a credit rating, can sell zero-coupon bonds to raise as much as $41bn (about R722bn) Adesina said in an interview on Thursday in Bloomberg’s New York office. 

The US, UK, Germany, France and EU plan to provide $8.5bn to SA to help the country cut its use of coal, which is used to generate more than 80% of its electricity. The world’s 13th-biggest producer of greenhouse gases will need to spend $250bn (about R4.4-trillion) over the next three decades to fund the closing down of coal-fired power plants and develop green energy sources and an expanded electricity grid, according to a study released in May.

SA is working on a plan to access the funds, which will be a combination of grants, concessional financing and potentially guarantees. The structure of the funding arrangements, which may be on a project-by-project basis, could make it impossible to use an SPV structure. 

AfDB’s proposal has received little support from SA and the funding partners, according to people with knowledge of the matter. 

The funding pledge, which will be made available over three to five years, was announced at the COP26 climate talks in Glasgow in November.

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