Development Finance Institutions in Climate Finance

The document argues that South Africa's Industrial Development Corporation (IDC) is currently unable to meet the country's climate goals due to a reliance on commercial financing and a portfolio skewed toward carbon-intensive sectors. It proposes a significant recapitalisation of R280 billion, the introduction of concessional lending at 2% below prime, and the diversification of the IDC board to include civil society and workers to ensure a just transition.

• South Africa's annual climate finance requirements are between R334 billion and R535 billion, but only R131 billion was mobilised on average from 2019 to 2021, with DFIs contributing only 7.6% of that amount.
• The Industrial Development Corporation (IDC) suffers from a misalignment between its green industrialisation mandate and its actual portfolio, which remains heavily focused on carbon-intensive sectors such as energy and mining.
• The IDC's capacity for climate action is hindered by capital constraints from its self-financing model, conservative lending practices involving high interest rates and short repayment periods, and a board that lacks representation from workers and civil society.
• To strengthen climate finance, the document recommends injecting up to R100 billion in fiscal support and leveraging monetary policy for another R180 billion, providing loans at 2% below prime with five-year grace periods, and aligning reporting with the Green Finance Taxonomy.

APA

iej_admin (2025). Development Finance Institutions in Climate Finance. Institute for Economic Justice. https://iej.org.za/resource/policy-brief/development-finance-institutions-in-climate-finance/

Chicago

iej_admin. Development Finance Institutions in Climate Finance. Institute for Economic Justice, 2025. https://iej.org.za/resource/policy-brief/development-finance-institutions-in-climate-finance/.

Wikipedia

{{cite report |last1=iej_admin |title=Development Finance Institutions in Climate Finance |publisher=Institute for Economic Justice |date=28 February 2025 |url=https://iej.org.za/resource/policy-brief/development-finance-institutions-in-climate-finance/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{iejadmin2025development, author = {iej\_admin}, title = {{Development Finance Institutions in Climate Finance}}, institution = {Institute for Economic Justice}, year = {2025}, month = feb, url = {https://iej.org.za/resource/policy-brief/development-finance-institutions-in-climate-finance/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }