In a significant move to address South Africa’s persistent energy crisis, the United Kingdom’s development finance institution, British International Investment (BII), has announced a ZAR125 million ($6.7 million) investment in two 140MW wind farms in the Northern and Eastern Cape of South Africa. This investment comes as part of a broader strategy to combat the nation’s energy challenges and boost economic growth.
The funding announcement was made at a business reception in Cape Town, where BII and the UK’s development finance institution celebrated 75 years of impactful investments in Africa. The wind farms, developed in collaboration with H1 Capital and EDF Renewables, are currently under construction and are expected to be operational by 2024. Once completed, they will contribute clean and affordable energy to South Africa, offering a potential solution to the country’s severe energy crisis.
South Africa has been grappling with an energy shortage, leading to frequent electricity cuts that averaged eight hours per day in 2022. These outages have had a significant economic impact, costing the continent between 2-4% of its gross domestic product annually, according to a study by the African Development Bank (AfDB). The investment by BII aligns with the South African government’s energy priorities and aims to alleviate the energy crisis while supporting a just energy transition.
Nick O’Donohoe, CEO of BII, emphasized the institution’s commitment to addressing pressing development challenges in South Africa, particularly in providing reliable and clean energy. He stated, “BII’s strategic objective in South Africa is to invest its patient, long-term capital to continue to meet the needs of those whose mission and purpose strive for equality, inclusive economic growth, and a more sustainable future.”
The new investment builds on BII’s longstanding partnership with South Africa, dating back to 1995. Over the years, BII has invested in at least 150 South African businesses, totaling over $2 billion committed to the country. The portfolio companies supported by BII have created an impressive 54,500 jobs annually since 2014. By the end of 2022, BII’s portfolio value in South Africa had expanded to approximately $285 million.
Besides the wind farm investment, BII has been actively involved in supporting strategic energy platforms in South Africa, including collaborations with Globeleq, Gridworks, ACWA, and Redstone. These initiatives aim to reduce emissions and provide consistent and clean power to South Africa’s cities, villages, townships, businesses, and farms, thereby boosting productivity and economic growth.
The UK’s commitment to addressing development challenges in South Africa extends beyond the energy sector. BII has also invested in digital infrastructure, digitally enabled businesses, and tech-led innovation, recognizing their potential to positively impact key development challenges. In a country where the digital gap remains significant, with broadband in only 10% of households, BII has partnered with South African-based Liquid Intelligent Solutions and Tyme Bank to advance digital solutions.
Antony Phillipson, British High Commissioner to South Africa, highlighted the importance of the UK’s collaboration with BII in fostering economic growth and job creation in South Africa. He stated, “The work the UK is doing with BII to help grow businesses in South Africa and in turn create thousands of local jobs is absolutely fundamental in supporting our shared ambition with South Africa to build an inclusive, sustainable future for all.”
In addition to its focus on clean energy and digital infrastructure, BII has been actively involved in promoting women’s economic development. As a founding member of the 2X Challenge, which has raised over $16 billion to empower women’s economic development, BII underscores its commitment to creating productive, sustainable, and inclusive economies in its target markets.
As the wind farm projects progress and contribute to South Africa’s energy landscape, BII’s multifaceted approach to investment underscores the institution’s commitment to fostering long-term development and sustainability in the region. The collaboration between the UK and South Africa, exemplified by BII’s investments, stands as a testament to the potential for international partnerships to address complex challenges and drive positive change on the African continent.