RMB Africa's Transition Partner

Media Release

September 2024

RMB finances Africa’s progress towards a just transition

According to the UN between 2011 and 2021, global sustainable fund investments grew more than 14-fold, from $186 billion to $2.7 trillion. Similar growth levels have been seen in the issuance of green, social, and sustainability bonds. It is estimated that global sustainable investment will rise to $53 trillion by 2025, representing over a third of global assets under management.

From June 2021 to June 2023, RMB facilitated ~R155 billion in sustainable and transition finance in Africa, helping our clients commit to reducing environmental impact and improving social outcomes.

More African businesses are driving sustainable economies 

Many corporates and governments in Africa are making great strides in setting and achieving their sustainability objectives and embracing the green economy. 

This is demonstrated by continued investment in renewable energy, energy efficiency, and decarbonisation projects. Accelerating these investments is a critical part of achieving Africa’s climate related goals. RMB partnered with its clients on key issues of the transition, ranging from reducing emissions to the preservation of eco-systems, and promotion of positive social outcomes.

Understanding and tracking the impact of transactions related to these initiatives is fundamental as it validates the role that finance plays in accelerating the journey to a sustainable economy.

“Since establishment of our sustainable finance business more than three years ago, our clients have committed to reducing about 4,000 kilotonnes of both direct and indirect greenhouse gas emissions, the equivalent emissions of 108,000 buses driven for one year. Similarly, they will also enable installed renewable energy capacity of about 2,400MW, which is enough electricity to supply the City of Cape Town’s peak power demand,” said Nigel Beck Head of Sustainable Finance and ESG at RMB.

A just transition to a more sustainable future requires a fundamental change in how all the earth’s natural resources are viewed and managed. To guarantee a future that is prosperous for all requires action on all fronts.

It is well known that environmental and social issues in developing economies, such as Africa, are complex and often inter-linked.

Embracing the importance of water conservation and stewardship, our clients have committed to implement process improvements that will reduce their water consumption by about 19,800 megalitres, which is enough to supply water to about 231,000 people in South Africa for one year. 

Global solid waste generation is estimated at over two billion tonnes annually, with landfill sites currently containing approximately 40% of the world's waste – the management thereof costing an estimated US$250 billion. Unlike other complex environmental challenges that require major technological advances to address, scalable methods to curb waste-generated pollution already exist. “We have supported our clients with their waste reduction and recycling initiatives which will result in a total of 71,600 tonnes of waste being recycled or diverted from landfills, the equivalent of 8,800 full-loaded garbage trucks,” said Beck.

Rehabilitation activities are becoming essential in reducing land damage and degradation caused by industrial activities such as mining, farming, and construction. In supporting rehabilitation and restoration efforts, our clients have committed to rehabilitate about 310 hectares of land, an area the size of the Walter Sisulu Botanical Gardens. The rehabilitated land provides an opportunity for restoration of biodiversity and wildlife with the resultant ecosystem services.

The Business for Nature Coalition estimates that the built environment is responsible for 40% of global GHG emissions, global resource use, and global waste streams. As environmental concerns increase among the public and investors, adoption of green buildings, known to use less water, energy, and other natural resources, can improve both environmental and economic performance of buildings.

Between 2021 and 2024, RMB facilitated the financing of 45 green buildings with either Edge, Green Star or BREEAM certifications. Each of the buildings achieved/will achieve a minimum of 20% improvement in energy, water, and embodied energy. 

The transition to a sustainable future requires addressing the current inequities which threaten this future. For example, a focus for African businesses is achieving gender equity and representation in their organisation. Our clients have therefore committed to achieving gender equity by creating promotion and recruitment opportunities for about 14,000 women.

Africa’s energy transition presents challenges, but it opens up even greater opportunities.

“Spread across the economy and many companies, the growing impact of greater sustainability is encouraging. African companies are embracing their future,” Beck added.

South Africa’s energy being created in real time

Contributing to the energy challenge, RMB’s Infrastructure Sector Solutions team hit the milestone of unlocking R50bn of financing for renewable energy both in public and private sector led power projects in South Africa over the past year.

“We estimate that these projects will power 500 000 households and can create around 50 000 job opportunities,” said Judy Kobus,“ Head Infrastructure Sector Solutions at RMB.

Kobus added: “It is as important to think about the real-world impact on peoples’ lives when thinking of cleaner energy. It’s not just about the number of megawatts delivered but also its effects on the broader society. When looking at the projects closed from this lens, they improve the lives of millions of people.”

This achievement underscores RMB’s commitment to supporting Africa’s Just Transition to a low-carbon economy.

Kobus noted that for most of RMB’s deals, the bank acted as sole mandated lead arranger in order to fast track delivery, introduce product, and sector innovations into the market, acting as a just transition partner.

RMB has provided crucial financial support to key clients participating in the Renewable Energy Independent Power Producer Procurement Programme (REIPPP) and the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), in addition to private power.

Over the last 2 years, RMB has collaborated with a wide range of clients, including energy intensive users such as Sibanye, Anglo American, Sasol, Harmony, and Richard’s Bay Minerals, as well as leading independent power producers (IPPs) like ACED, Mainstream, Red Rocket, SOLA Group, EDF Renewables, Engie, G7, and Scatec.

Said Kobus: “We have successfully closed projects across wind, solar PV, battery energy storage systems (BESS), and hybrid technologies, both within South Africa and the broader Africa region, including a notable 60 MW project in Selebi Phikwe, Botswana.”

The team has created and implemented new innovative financing structures, including, preference share products, and various CPI-linked instruments, to meet the specific needs of each project.

South Africa’s wholesale traded electricity market is being created right now which will create a far more efficient system to allow new generation and storage technology to access the market. This will reduce the cost of energy – a primary input cost in the South African economy - for decades to come.

She added that RMB is supporting the move to traded electricity markets not only in South Africa but driving additional power generation capacity to be traded onto the Southern Africa Power Pool.

“This takes a very different funding approach to the usual project finance contractual frameworks.”

With the development of traded market platforms, comes electricity aggregators and traders. These new market entrants allow smaller users who would like more flexible power solutions to benefit from grid scale renewable energy. Traders enter into long-term agreements with large scale generators to build capacity, and then on-sell the renewable energy to the smaller users under shorter-term contracts. RMB is instrumental in facilitating and supporting these new players in the market.

More dispersed power generation will require more investment in the grid.

“RMB is investing in deep grid upgrades to unlock grid connection capacity. Going forward we look to support further investments in overhead lines through the new National Transmission Company of South Africa. Each of these will need new thinking around funding mechanisms.

“Our focus on understanding the unique challenges and opportunities in the sector has enabled us to deliver the thinking that helps drive sustainable growth and development,“ Kobus concluded.

ENDS