03 Mar 2022 

By Ethan van Diemen

A new report shows that total finance provided by South African financial institutions, Standard Bank in particular, to fossil fuel projects and fossil fuel companies between 2016 and June 2021 amount to at least $8.4-billion.

Just days after the release of the most recent Intergovernmental Panel on Climate Change (IPCC) report that UN Secretary-General António Guterres has described as an “atlas of human suffering”, another report has been released that further reaffirms that the climate crisis disproportionately affects African countries.

Perhaps most damningly, it shows that South Africa’s major banks are a big part of the problem.

The report, titled Locked out of a Just Transition: Fossil fuel financing in Africa, is the product of research by BankTrack, Milieudefensie, Oil Change International and 19 African partners, including 350Africa, Alliance for Empowering Rural Communities from Ghana and WEP Nigeria.

The report reveals billions of dollars in finance – the majority from European, Asian and North American financial institutions – with the potential to lock Africa into fossil fuel-led development, despite the continent’s massive potential for renewable energy.

Among the key revelations in the report is that between 2016, following the adoption of the Paris Climate Agreement, and June 2021, public and private financial institutions poured at least $132-billion in lending and underwriting into 964 gas, oil and coal projects in west, east, central and southern Africa. Among them are South Africa’s banking giants.

The report shows that total finance provided by South African financial institutions to fossil fuel projects and fossil fuel companies between 2016 and June 2021 for 58 fossil fuel projects and 24 fossil fuel companies selected for this report amounted to at least $8.4-billion or 6.4% of the overall total of $132.3-billion.

Standard Bank, the report explains, is the overall biggest South African fossil fuel financier with $2.3-billion. Standard Bank, Absa Group and Nedbank are all in the top 15 of private sector financial institutions providing direct project financing, in 7th, 12th and 15th place, respectively. Put differently, Standard Bank is in the global top 10 financial institutions financing fossil fuel projects in Africa.

It continues that most of the general corporate finance coming from Africa itself – $7.7-billion in total – is mostly made up of South African finance to the value of $5.7-billion.


These financiers – and especially those that they finance – respond to the objections of environmentalists and those concerned about the impacts of global heating and climate change that fossil fuel projects contribute to Africa’s economic and social development. There is perhaps no better South African example of this than Minister of Mineral Resources and Energy Gwede Mantashe.

At the Africa Energy Week, held from 9 to 12 November 2021 in Cape Town, Mantashe said Africans should seize the moment and position African oil and gas “at the forefront of global energy growth”. He railed against the developed Global North, explaining that Africa was being “encircled” by “rich and powerful” nations intent on unfairly seeking to stifle the beneficiation of Africa’s oil and gas reserves and the economic development that would follow.

Mantashe explained that “our continent, collectively, and her individual countries, is made to bear the brunt of the heavy polluters. We are being pressured, even compelled, to move away from all forms of fossil fuels – including resources such as gas, which have been regarded as key resources for industrialisation. Africa must seize the moment, we must, indeed, position African oil and gas at the forefront of global energy growth.”

Despite the African continent being home to 39% of the world’s potential for renewable energy according to Carbon Tracker, African countries are entering into debt traps, poor contracts and ownership structures marked by disproportionate foreign multinational ownership that mainly serves the interests of companies and nations outside Africa, while African people and African governments bear the risks.

The report explains that new fossil fuel projects also risk “locking countries into fossil fuel dependency” while “stranded assets combined with growing national debt and government deficits, could generate a dangerous ripple effect leading to massive unemployment and rising poverty, locking countries into a vicious cycle of poverty for decades to come.”

An example of this can be seen in Mantashe’s defence of the inclusion of new coal infrastructure in the Integrated Resources Plan (IRP) 2019. It provides for 1,500MW of additional coal power by the year 2030. This, despite recent studies that has found that the Department of Mineral Resources and Energy (DMRE) plans to procure this new coal-powered electricity will cost at least R23-billion more than a least cost-optimal electricity plan, and will result in 25,000 economy-wide job losses by 2030.

The report also uses Eskom’s Medupi coal-fired power plant as a case study. It shows how new coal, financed largely by international capital, has already all but locked South Africa into fossil fuel dependency for the foreseeable future, all the while causing economic and environmental hardship.

Commissioned in 2007, the plant was not completed until mid-2021, after years of delays and cost overruns.

2018 report from the Energy Research Centre at UCT states that the cost overruns of the Medupi and other power plants have contributed to the rapidly increasing electricity prices. It is perhaps noteworthy then that Eskom has recently made news as they sought a tariff increase of more than 20% from the National Energy Regulator of South Africa (Nersa).


Beyond the financial implications of locking in fossil-fuel dependency, the report articulates some of the environmental considerations as it relates to the South African case study.

“Due to air pollution through sulphur dioxide, particulate matter, and other particles, the Medupi power plant is estimated to cause 364 deaths per year, as well as 453 cases of chronic bronchitis among adults and 1,552 among children, and is therefore considered Eskom’s most lethal power station,” the report reads.

It continues that “at full capacity, the Medupi power station will release around 30 million tonnes of carbon dioxide into the atmosphere every year, worsening the climate crisis. With an annual coal consumption of about 15 million tonnes and an operational life expectancy of 50 years, the power station will likely drive the expansion of coal mining in South Africa.”

Glen Tyler-Davies, South Africa Team Leader for 350 Africa, told Daily Maverick that “the most important message from the report is that the funding of fossil fuel projects on the continent is taking money and political capital away from a just transition to a more equitable energy system”.

Fossil fuels have not contributed to eradicating poverty on the continent, and the financed projects covered in the report represent an opportunity cost of at least $132-billion. This is money that could have been used to fund a just transition to renewable energy: energy that is well suited to the decentralised energy requirements of Africa, does not damage people’s health or our climate and is more affordable for African governments and people.”

Landry Ninteretse, 350Africa.org regional director, said: “Africans are experiencing severe climate impacts driven by high emissions from the biggest polluters in the developed world. Wealthy countries of Europe, North America, east Asia and Australia, historically big emitters, have not only the responsibility to fund the Just Transition and energy transition plans that African countries are committing to implement, but also to halt any new investments in the fossil fuel industry.

“It’s time for governments and financial institutions to starve fossil fuels and redirect funding towards this transition to sustainable, clean energy, instead of locking African nations into fossil fuel dependency.”

South Africa’s big four banks are yet to respond to the report, but in earlier media reports, at least three of them have given themselves no more than five years to stop funding new coal-fired projects.