The African Development Bank has successfully obtained a $1 billion guarantee from the United Kingdom, aimed at bolstering lending initiatives supporting South Africa’s transition to renewable energy and the establishment of a more sustainable economy.

The bank’s lending capacity will be expanded to support South Africa’s Just Energy Transition (JET), focusing on investments in clean energy projects, grid enhancements, electric vehicles, and the production of green hydrogen, according to a press statement released on Sunday.

ALSO READ: 1,197 Nigerian trained doctors migrate to UK since May

A portion of the funds will be allocated to facilitate a “just transition” for communities in South Africa’s Mpumalanga province that are dependent on coal, ensuring that the shift to renewable energy does not adversely impact livelihoods.

Dr. Kevin Kariuki, the bank’s Vice President for Power, Energy, and Climate, emphasized the innovative nature of the operation, highlighting the African Development Bank’s commitment to providing financial solutions that enhance access to climate finance and support Africa’s low-carbon development and net-zero ambitions.

This development, coinciding with the COP28 climate summit, was lauded by South Africa’s National Treasury as a crucial partnership that enables the implementation of the country’s energy transition in a socially responsible manner.

Director General Leila Mokaddem expressed gratitude for the guarantee, stating that it will significantly support South Africa’s Just Energy Transition, with the bank steadfast in accompanying the country on this important journey.

ALSO READ: Top Nigerian banks achieve N2.1tn in profits for Q3, 214% growth

As numerous African nations navigate the delicate balance between development needs and the imperative to reduce emissions, the continent is seeking over $250 billion annually in external financing for climate action by 2030.

Coupled with innovative financing solutions from institutions like the African Development Bank, aims to contribute to bridging the substantial climate financing gap.