European Investment Bank and DBSA Collaborate for Cleaner Energy in South Africa

Help me to welcome Ambroise Fayolle. I hope I got it right, right? Very right. Thank you very much, Vice-President, European Investment Bank. You're in town, you don't know what we've gone through. I can assure you don't want to know what we've gone through. But however, we welcome you very much indeed for coming and bringing a good news story shall we put it this way. You're setting up what you are calling a regional hub in Pretoria to save Southern Africa and the Indian Ocean. First of all, I want to know who is sitting in this office before we talk about what they are doing. So what we are trying to do is to develop a closer relationship with our partners in the field, to be closer to the field basically. We have been active in the region since 1970, in Madagascar. 34 years ago. In South Africa, the first project was in 1995 with IDC and with DBSA. So a long, long tradition of lending. And what we want to do is to be more present. So for that reason, we have created this regional hub that will help us also in connection with the EU representation because the European Investment Bank is the bank of the European Union, to develop projects here that will serve the purposes of what we try to develop, which is developing climate projects, climate-related projects. And also, of course, to help the people in South Africa. Absolutely. Let's talk about the numbers here. So you're setting up this hub and I see you are staffing it with specialists, you are saying, economists, engineers and other experts. And you are looking at South Africa's just energy transition in addition to climate change targeted projects. Let's just talk about, number one, the raw numbers in terms of the extra money that you're bringing in, because you've already been active here. So we have been active in South Africa, as I said, since 1995, in about 50 projects. So far, and around 4 billion euros. So that's what we have done. We try to accelerate this. All in all, in Africa, last year, what we have done is about 4 billion euros, which means something like 50% of what we do outside of Europe. So it's the first continent where we are active. Half of all your projects are on the African continent. Outside Europe, yes. Most of what we do is inside Europe. Outside Europe, half of what we do is in Africa. Half of all projects are in Africa. Let's talk about what you're doing. So what we are trying to develop is projects that have mostly related to climate change. Renewable energy projects, projects that help businesses develop their renewable energy projects, transport, clean transport, water projects, projects related to adaptation, everything that has a sort of climate content that help people, housing, energy efficiency, these kind of things that we try to develop to help the countries deal with a global challenge, which is climate change. You are the financing arm, of course, of the European Union. So I wanted to know whether these are just loans or it's a mix? Loans, grants? I mean, it depends. It can be loans, but we are a AAA institution. So we borrow very cheap and long. And since we are a public institution, we make our projects benefit from these conditions. It can be blended with EU money in particular, making them even more attractive. We can lend to public sector institutions, we can lend to private sector institutions. And actually, what we see here in South Africa, what I'm going to sign is a loan with a public institution, which is DBSA, and a loan with a private institution, which is First Rent Bank. Absolutely. Talk numbers there. So the numbers. With DBSA, we've developed a partnership that is a long partnership and a high quality one. And what we have done two years ago is to launch a process where we would help them develop an instrument for their client base to be able to do renewable energy projects small scale. So we've done 200 million loans two years ago, and we have topped up this with a further 100 million euros in addition to the 200. So it's 300 million, which will give them more means to do more projects. And with First Rent, it will be 200 million that will be signed tomorrow. Okay, that's 200 million euros. The same objective, to favour renewable energy projects. So often when we talk about projects across the African continent, one refrain we keep getting is that it is difficult, number one, to, what do they call them, to bring projects to financial closure. I just want to know in terms of the work that you do on the continent, what are you finding challenging in getting those projects to the stage where they're implementable? Well, what is challenging is often that you need a lot of project preparation. So it takes a long time. It takes a long time, not only in Africa. Oh, it's everywhere in the world. Yes, yes. But it takes a long time. And for example, in some African countries, the scale is limited because these are smaller countries. So you need to try to make that at the regional level, which is not necessarily easy. But we manage that. And what we try to do is also to use, for example, financial institutions, African financial institutions, so that we don't have a network ourselves, but we use their network to try to help them bring that to their clients, because they know their client base better than we do. Right. And are you finding it easy to find those local partners that you require? I mean, FirstRand is the most valuable company by market capitalization in the JSC, so they are a big player. But step outside South Africa and the situation is completely different. Does that mean you are less active there? Not necessarily. We are very active with institutions like TDB or... So, Trade and Development Bank in East... Exactly, or Afrixin Bank or institutions like EcoBank in West Africa. So, no, no, we have a number of partners that are good partners and we built on that. What about identifying the projects that you want to work on? How easy is that work? Actually, what is our objective is to help countries implement their strategies. So, we don't necessarily... So, the countries come to you? Yes, or the promoters in the countries come to us. And then, for example, for the project with DBSA, the objective is to help them find projects that are renewable energy projects for small businesses. We leave that to them to find those projects. I mean, they know better than us. Absolutely. Very quickly, your thoughts on South Africa's Just Energy Transition. There's been a lot of commentary around, one, the cost of it. And then, obviously, secondly, as well, the availability of funds to support it. Well, what we try to do is to help with this. I mean, we are also part of the Just Energy Transition package. This is a very important initiative where EIB has provided one billion euros. I mean, there are a lot of initiatives. Let's make sure that time is of the essence. So, let's make sure that things move quickly up so that also can help provide the necessary change in the climate way of providing electricity. Absolutely. I'm certainly hoping that we'll be able to see you more, which would mean you'll be meeting more and more partners and more active in getting more projects happening in the region. I hope so. 

CNBC Africa is joined by Ambroise Fayolle, Vice-President, European Investment Bank for this discussion. 

European Investment Bank partners with DBSA for cleaner S.Africa energy

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European Investment Bank partners with DBSA for cleaner S.Africa energy

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