It will require countries to strengthen domestic institutions and foster partnerships
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The journey towards a Just Energy Transition for Africa requires a multi-faceted approach that integrates fit-for-purpose financing, skills development and strong project pipelines.
As Neil Cole, Public Finance and PDIA Consultant in the South African Presidency, emphasised, public finance remains the dominant source of adaptation funding, as private investors favour mitigation efforts.
Cole was part of a panel at the Solar Power Africa 2025 conference in Cape Town, South Africa on Tuesday (4 March) that tackled the topic – Unlocking Funds for Africa’s Just Energy Transition: Access, Success Stories, and Skills Development.
He said national budget processes must strategically embed climate adaptation investments, ensuring alignment with public-private partnerships and financing mechanisms across sectors such as water, infrastructure and agriculture.
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“If one looks at the climate finance landscape, you can see where private investment is going and it’s largely into mitigation.
“And the financing for climate adaptation is largely in public finance, in investment into adaptation. And that means that you’re going to have to more strongly align the need for investments in climate adaptation to be part of that budget process.”
He said a critical lesson from South Africa’s e-toll debacle highlights the importance of clarity in financing models – whether through taxation, user-pay models or hybrid approaches.
Securing early buy-in from constituencies is crucial to sustaining long-term financial commitments and avoiding costly policy reversals, said Cole.
Concessional finance has long been defined by institutions such aws the African Development Fund (ADF) and the International Development Association (IDA), offering loans with favourable terms to low-income countries.
However, within Africa’s energy transition discourse, concessionality has come to mean any loan priced below sovereign debt market rates.
This evolving definition presents challenges, as multilateral development banks (MDBs) and development finance institutions (DFIs) maintain conservative credit policies that fail to reflect the urgency of the climate crisis.
Cole argued that a wartime-like financing approach – akin to the UK’s 48% GDP allocation during World War II – may be necessary. MDBs and DFIs must reform their lending models to offer affordable, fit-for-purpose financing that accelerates decarbonisation and infrastructure investment.
Jack Radmore, Energy Programme Manager and Climate Finance Lead at GreenCape, highlighted that the real challenge is not capital availability, but rather the lack of bankable projects.
South Africa’s experience underlines the importance of concessional finance in early-stage project development, enabling projects to reach commercial viability.
“If we’re talking about transitional finance, we need to be looking at the concessionality, and is it concessional enough, and is it coming in at an early enough stage in the project pipeline to actually stimulate and build a project to where it’s financially ready?
“On the project development side, I think there’s a massive opportunity for continued intervention. And the UK’s Climate Finance Accelerator (CFA), I think, has scratched the surface of what is possible.
“So they have run three rounds of pipeline development for projects where they take them through a very accelerated, sort of six month development phase, providing very basic, basically, translation services – how do you help an engineer talk to a financier and a little bit of capacity around greening and carbon, and then putting them up in front of a number of different financiers, and having those financiers tear into pieces and then rebuild them.
“And what that does is it, one, provides the financiers of the pipeline. It provides them with an accelerated due diligence phase, where they can see into the nuts and bolts of these projects, and it builds a collaborative partnership, because they’re part of putting those projects back together and making them better in the three rounds.”
Radmore said that the UK’s CFA has closed around R120 million worth of investments into 15 different projects.
“… everything from residential solar, commercial solar… Green Riders is a great example where they’re doing micro mobility all the way through to biogas and circular economy.
“So I think there is a massive opportunity to continue to focus on building that pipeline of investment ready projects that are able to respond to calls in with financier space.”
The session also explored the fact that a Just Energy Transition is not just about finance, but it also hinges on skills development.
As South Africa expands its renewable energy sector, Eskom and independent power producers face a critical shortage of skilled workers.
The PowerUp initiative, a collaboration between GreenCape, government and industry stakeholders, seeks to address this gap by aligning training programmes with industry needs.
Despite commitments from the renewable energy industry, participation in internship and skills development programmes remains low.
Radmore stressed that strengthening partnerships between industry and training institutions is essential to building a workforce capable of sustaining the green economy.
“We are importing welders and high-voltage engineers because South African training institutions are not yet producing graduates with the necessary competencies,” Radmore said.
Beyond concessionality, the strategic deployment of development finance is key.
Radmore pointed out that while DFIs should support high-risk, non-commercial sectors such as water, agriculture, and electric mobility, they often compete with commercial banks in the renewable energy space, where private investment is already robust.
Redirecting concessional finance towards sectors lacking a clear commercial case would maximise its impact.
Saliem Fakir, Executive Director of the African Climate Foundation agreed, advocating for a shift in negotiating dynamics.
He said African governments must define their own financing needs and terms, rather than relying on donor-driven agendas.
The establishment of green industry funds in several African countries illustrates a growing demand-driven approach, where local institutions engage directly with international financiers to shape equitable financing terms.
“It’s really about whether you are taking a loan to buy more flowers, or whether you’re taking a loan to produce more flowers in the economy,” said Fakir.
“So it’s about the the rate of return you can get… from a concessional loan in the economy… so you can pay off and it must be the growth rate… must be higher than the interest rate, that’s crucial.
“So this ideological obsession about whether it’s concession or not, it matters yes…
“But it’s not the only part of the equation that one has to look at. You actually have to look at the other side as well. What good use are you going to put the money to in order to be able to generate the level of revenues to be able to pay off that. And there’s also domestic sources that one needs to look at.”
Earlier in the discussion, Cole said the South African government still strongly believes that “we can mobilise the R1.5 trillion [for the JET programme], and that the plan is implementable over the period, with some extension, especially infrastructure investment that goes into 2030.”
Cole stressed that strong policy articulation and cross-government coordination are essential to unlocking funds.
He reiterated that credible, long-term planning is crucial to overcoming bottlenecks and mobilising investment, particularly for infrastructure development.
“A well-structured plan will attract financing, but only if we demonstrate clear absorptive capacity and capability,” Cole noted.
Fakir also underscored a broader issue: many African nations are grappling with debt distress, limiting their ability to secure new financing.
Countries such as Malawi, which heavily rely on foreign aid, face increasing economic constraints as Western nations reduce climate-related financial commitments.
“The future of climate finance is shifting. African nations must engage directly with alternative financiers, including development finance institutions in Asia, to unlock capital and build resilience,” said Fakir.
The panelists agreed that by strengthening domestic institutions and fostering partnerships, countries in Africa can take charge of their energy transitions, ensuring that funding serves their developmental and climate objectives, rather than external interests.
“US President Donald Trump signed Executive Order 14162 in terms of which the United States is engaging in a re-prioritisation exercise and is thus revoking and rescinding the US International Climate Finance Plan issued by the previous administration, including policies that were implemented to advance JETP,” said a statement issued on Thursday (6 December) by the Department of International Relations and Cooperation (DIRCO).
The Department said that as a result, effective immediately, the US has announced the termination of its membership of the International Partners Group (IPG) for JETPs South Africa, Indonesia and Vietnam.
“With the US withdrawal, associated financial pledges are also withdrawn. Grant projects that were previously funded and in planning or implementation phases have been cancelled. South Africa notes the decision and remains committed to the implementation of international agreements, including decisions taken at the historic Paris Climate Change Conference. South Africa and other international partners will evaluate the implications of the US withdrawal from the JETP.”
The US had initially pledged more than $1.5 billion of grant and commercial funding to the JET partnership.
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