South Africa

South Africa is one of the leading economic powers in Africa. Yet the country continues to be marked by high levels of socioeconomic inequalities. AFD’s support has historically focused on the upliftment of disadvantaged populations. Since 2008, it has also been supporting infrastructure development and is scaling up its climate action.

Context

With a population of about 59 million and an annual income of nearly US $ 12,390 per capita, South Africa is one of the largest economies on the African continent. With a GDP of over US$ 320 billion at the end of 2015, South Africa is the second economy of sub-Saharan Africa after Nigeria.

South Africa has a rich and varied mineral wealth, a well-developed financial sector, efficient legal and communication sectors and modern infrastructure. Despite the formal eradication of apartheid in the early 1990s and a much-celebrated transition to democracy in 1994, South Africa remains a land of stark economic inequalities along racial lines. In addition, the country has experienced high unemployment, patchy service delivery and governance issues facing state-owned companies.

South Africa is amongst the world's most carbon-intensive economies due to its heavy reliance on coal for electricity generation and an energy-intensive industrial and mining sector. However, the country has shown great commitment to reducing carbon emissions by decreasing its dependence on coal, and increasing energy generation from renewable sources by 2030. If these efforts are sustained, carbon emissions should stabilise between 2025 and 2030 and decline thereafter.

AFD has been active in South Africa since 1994, offering innovative financing solutions and technical assistance to support the South African government in its development policy. AFD works with government partners and local authorities to promote a low-carbon economy and reduce economic, social and territorial inequalities.

Around half of AFD’s projects are co-financed with partners – not just other development banks – but also research institutions, universities, NGOs, foundations, think tanks, development institutions, United Nations agencies and local and regional authorities. Co-financing helps to multiply the impact of our projects and attract other partners, and allowing us to be even more ambitious.

AFD's South Africa office is directly attached to the Southern Africa regional office.

Our approach

"AFD and South Africa: a sustainable and innovative partnership"

South Africa has huge renewable energy potential, especially for solar and wind energy. To promote a just and low-carbon energy transition in South Africa, AFD is supporting the development of efficient and green energy services accessible to all. It builds on three major strengths: diversified financing, appropriate technical assistance and an extensive network of partners.

In addition, since 2021, France has been a member of the Just Energy Transition Partnership, an initiative launched at COP26 to accelerate the decarbonization of South Africa’s economy. This commitment will be implemented by AFD.
AFD today wishes to provide broader assistance to the country’s low-carbon energy transition through various types of support:

Financing for the national government and municipalities, with a specific focus on the “just” part of the transition and the impact of the coal phase-out in Mpumalanga province
Financing and peer-to-peer exchanges with ESKOM, the South African state-owned electricity production and distribution utility, to support the company’s split into three entities and to help diversify its energy mix

AFD supports South Africa’s sustainable urban development policy, which aims to make cities and human settlements inclusive, safe, resilient and sustainable. It provides direct loans to metropolitan municipalities for infrastructure projects and to fund capital budgets to support development policies. It also uses financial intermediaries to support small and medium-sized municipalities in their basic infrastructure investments.

South Africa’s largest cities also call on AFD’s expertise for their initiatives to promote low-carbon urban development and greater resilience to climate change.

Vocational training and access to decent employment, especially for disadvantaged youth, are key to unlocking the economic potential of the country. Currently, more than half of young people aged 15-24 are unemployed in South Africa.

AFD supports the South African Government by partnering with local research institutes. The objective is to gain a better understanding of social and economic inequalities and provide information and potential solutions to reduce inequalities, in particular in the context of the just transition.

The protection of natural ecosystems is central to AFD’s action in South Africa. To halt biodiversity loss and protect ecosystems, AFD supports the restoration and sustainable management of natural areas, with and for local communities. AFD works with the country’s national and local authorities to ensure cooperation between the biodiversity and conservation actors.

Most of the issues related to biodiversity in Southern Africa transcend borders. AFD has developed cross-border operations in three key areas:

Community-based natural resource management: AFD supports models that promote conservation beyond protected areas, for rural rehabilitation and a sustainable future
Peer-to-peer cooperation: Recognizing existing expertise in the region, AFD promotes partnerships and capacity building between Southern African and French institutions. For example, through experience-sharing and training, the cooperation project between Réunion National Park and South African National Parks (SANParks) aims to develop efficient regional cooperation and strengthen local know-how in biodiversity conservation
Assessment and spatial mapping of biodiversity: Financed by AFD and the French Facility for Global Environment (FFEM), the Spatial Assessment and Mapping of Biodiversity (SBAPP) project aims to broaden and deepen knowledge of biodiversity in South Africa, Mozambique, Namibia and Malawi, and promote cooperation on biodiversity science in the region