SOUTH AFRICA: DBSA launches green bond for climate projects

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SOUTH AFRICA: DBSA launches green bond for climate projects© Freedom365day/Shutterstock

The Development Bank of South Africa (DBSA) has just launched its first green bond through a private placement with the French Development Agency (AFD). The purpose of the loan is to mobilize 200 million euros to finance climate change adaptation in South Africa.

The Development Bank of South Africa (DBSA) wants to increase its climate financing. The financial institution has just launched its first €200 million green bond. This loan is being launched in the framework of a private placement with French Development Agency (AFD). The green bond will mobilize funds to finance projects that can contribute to climate change mitigation and/or adaptation in South Africa.

According to the DBSA, this initiative is in line with the objective of South Africa’s National Development Plan (NDP), namely a “fair and environmentally sustainable transition to a low-carbon economy”, and is consistent with the Sustainable Development Goals (SDGs). The South African bank also intends to use this mechanism to increase its climate finance tenfold.

Concrete actions in favour of the climate

“The bond will be structured in accordance with the bank’s recently published Green Bond Framework, which reiterates the DBSA’s commitment to play a role in the just transition to a low-carbon economy. The framework is aligned with the International Capital Markets Association (ICMA) Green Bond Principles,” said DBSA. The South African government-owned bank is not a first-time climate and sustainable development initiative.

The DBSA is involved in the development of renewable energy, notably through the Renewable Energy Independent Power Producer Procurement (REIPPP). This ambitious programme was launched by the South African government to attract investment from independent power producers (IPPs). The bank is now accredited with the Global Environment Facility (GEF) and the Green Climate Fund (GCF).

“In partnership with the GCF, the DBSA has implemented large-scale programmes that support the transition to a low-carbon economy, including the Climate Finance Facility (CFF), a lending facility set up to encourage private sector investment in climate-related projects in Southern Africa, and the Embedded Generation Investment Programme (EGIP), a support facility for integrated renewable energy projects in South Africa,” says the Johannesburg-based bank. In 2019, the GCF has made available to the DBSA an envelope of US$56 million to finance climate projects in southern African countries.

Jean Marie Takouleu

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