{"id":831588,"date":"2025-07-17T14:15:00","date_gmt":"2025-07-17T12:15:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=831588"},"modified":"2025-07-17T19:12:15","modified_gmt":"2025-07-17T17:12:15","slug":"south-africa-needs-trillions-and-the-private-sector-has-the-cash","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/831588\/south-africa-needs-trillions-and-the-private-sector-has-the-cash\/","title":{"rendered":"South Africa needs trillions of rands – and the private sector has the cash"},"content":{"rendered":"\n

Trillions of rands are needed to shift South Africa\u2019s energy generation to renewables, and private credit can play a significant role in hitting this goal. <\/p>\n\n\n\n

The International Energy Agency (IEA) said that achieving net-zero emissions by 2050 will require over $4 trillion (R70 trillion) in annual clean energy investment by 2030, three times the current budget.\u00a0<\/p>\n\n\n\n

In South Africa, former Minister of Forestry, Fisheries, and the Environment Barbara Creecy<\/a> said R1.5 trillion would be needed by 2027 to hit required levels for the Just Energy Transition Investment Plan (JET IP). <\/p>\n\n\n\n

Stanlib\u2019s Johan Marnewick, Portfolio Manager for the STANLIB Khanyisa Energy Transition Fund, said that public funding alone cannot meet the demand for net-zero emissions amid the nation’s debt struggles.<\/p>\n\n\n\n

He said that the private sector will be required to step up, with private sector credit a strong avenue to bridge the financing gap. <\/p>\n\n\n\n

Private credit refers to non-bank, non-public lending and has seen massive growth in recent years as investors are attracted to the yield, diversification, and inflation protection.<\/p>\n\n\n\n

The JSE All Bond Index is dominated by eight issuers, mostly sovereign and state-owned entities, and accounts for 95% of the market. <\/p>\n\n\n\n

This concentration creates a bottleneck in capital allocation, limiting the diversity of investment opportunities available to institutional investors.<\/p>\n\n\n\n

Private credit, on the other hand, offers a broader and more diversified set of borrowers, including infrastructure and renewable energy projects. <\/p>\n\n\n\n

Realistically, South Africa has the potential to generate up to 49% of its electricity from renewable sources by 2030, which highlights the need for financing in the sector.<\/p>\n\n\n\n

\u201cThe energy transition is capital-intensive and long-term, two characteristics that align well with private credit,\u201d said Marnewick. <\/p>\n\n\n\n

\u201cInstitutional investors like pension funds and insurers, with liabilities stretching 20 to 70 years, are ideally positioned to provide the patient capital needed for infrastructure and clean energy projects.\u201d <\/p>\n\n\n\n

On a technical side, private credit offers low correlation with public markets, which can help diversify investment portfolios. <\/p>\n\n\n\n

Its floating-rate structures can hedge against inflation and interest rate volatility, offering attractive risk-adjusted returns and an illiquidity premium.<\/p>\n\n\n

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Partnerships are key <\/h2>\n\n\n\n

Private credit is not the only way to incorporate the private sector in the energy transition, with many calling for private-public partnerships. <\/p>\n\n\n\n

This was outlined by The RE100<\/a>, a global corporate renewable energy initiative whose members include several large businesses committed to using 100% renewable electricity by 2050.<\/p>\n\n\n\n

Over 100 member companies have operations in South Africa, including Apple, KIA, Microsoft, Meta, Nike, Samsung, Starbucks and Investec.<\/p>\n\n\n\n

The RE100 noted that public-private partnerships are essential in driving positive policy change and would increase access to affordable, reliable, renewable electricity for all consumers in the country.<\/p>\n\n\n\n

It added that speeding up the rollout of renewable energy is essential for energy security, economic growth, competitiveness, and achieving the nation\u2019s climate goals. <\/p>\n\n\n\n

It called on the government to accelerate electricity market reforms and set clear renewable energy goals. Its policy recommendations include:<\/p>\n\n\n\n