South Africa's energy transition will rise - or stall - on reliability

SOUTH Africa’s energy transition hinges on private capital stepping in to fill funding gaps. Although the country has secured over R18 billion in new loans from the African Development Bank (AfDB) and the German KfW Development Bank to support its Just Energy Transition, this funding remains insufficient and is heavily loan-dependent, adding to an already considerable debt burden.

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SOUTH Africa has secured over R18 billion in new loans from the African Development Bank.

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Compounding this, global interest rates remain high, and financing is increasingly flowing toward lower-risk regions. As a result, the basis on which capital is allocated is shifting from who has the boldest vision to who can deliver reliably and measurably over time.

Capital is no longer flowing freely

Despite efforts by central banks to loosen monetary policy, interest rates have risen unevenly since 2021.

In the US, for example, the yield on the US 10-year Treasury note - which averaged 2.3% from 2013 and 2019 3 - currently sits at 4.13% 4.

Similar trends are visible across most advanced and developing economies, with China being a notable exception.

These elevated interest rates, coupled with persistent geopolitical uncertainty, are driving capital toward markets where performance is more predictable and the cost of financing is lower.