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KfW loan for South Africa

Hardy GraupnerApril 8, 2015

German development KfW announced it has given a large loan to South Africa to help the nation make its energy grid more sustainable. It's an investment in renewables, with the emphasis being on solar and wind energy.

https://p.dw.com/p/1F4Ey
Power line in South Africa
Image: AFP/Getty Images/D. Garcia

Commissioned by the German Development Ministry, state-owned KfW bank granted a 4-billion-rand (300-million-euro, $326-million) loan to South Africa's power supplier ESKOM, the lender reported on its website on Wednesday.

Although most loans are paid out in euros or dollars, this one was disbursed in rand, making it the biggest single credit ever granted by the German bank in a local currency to any developing or emerging nation.

The financial assistance is meant to help South Africa make a quantum leap towards more sustainable and reliable energy supplies in a nation where power outages are a still a common phenomenon.

Good for the environment

The money is to go primarily towards hooking up a number of green power stations to the national energy grid, enabling the country to lower its harmful CO2 emissions by 5.5 million tons annually.

KfW indicated the focus would be on integrating the Kiwano solar thermal power station in Upington and the Ingula Pumped Storage Scheme in Braamhoek.

Winds of Change: The Burgeoning African Energy Sector

"South Africa's energy-policy reorientation is a big step away from being dependent on coal, and a big step towards sustainable power generation," KfW board member Norbert Kloppenburg said in a statement.