• Facility targets decarbonization of carbon-intensive firms via structured financing
  

• Initiative supports South Africa’s coal phase-out and promotes transition finance adoption

British International Investment (BII), the United Kingdom's development finance institution, and South African bank FirstRand have announced a $150 million financing facility to accelerate energy transition projects in Africa.

The initiative, announced on Tuesday, is BII's first investment dedicated to transition finance. It aims to help carbon-intensive companies access the funding needed to decarbonize their operations. BII will provide both financial support and technical assistance to FirstRand to help establish a structured framework and practices for transition financing.

The facility will be deployed through the group's investment and merchant banking subsidiaries, Rand Merchant Bank (RMB) and First National Bank (FNB). It will comply with British policy on overseas fossil fuel financing.

"Transition finance is a powerful enabler for a vast array of companies that, in turn, make a meaningful contribution to decarbonisation, through investing in more efficient, climate resilient business practices and processes," said Mary Vilakazi, CEO of FirstRand.

The initiative also aims to raise awareness of transition finance in the African market and position it as a new asset class that could inspire other financial institutions on the continent.

The fund's creation comes as South Africa makes decarbonization a key element of its energy policy. The country is seeking to reduce its reliance on coal, expand the private sector's role in renewable energy production, and secure its supply by attracting more investment.

Sandrine Gaingne