THE SCALING UP OF DEVELOPMENT FINANCE INSTITUTIONS IN CLIMATE FINANCE PROVISION TO SUPPORT LOCALISATION AND WORKER TRANSITIONS

This policy brief analyzes the Industrial Development Corporation (IDC) in South Africa, finding that its self-financing model, risk-averse lending, and private-sector-biased governance prevent it from effectively funding a just energy transition. Despite a mandate for green industrialization, the IDC remains heavily invested in carbon-intensive sectors and lacks the transparency and patient capital necessary for long-term climate goals.

• The Industrial Development Corporation (IDC) is unable to meet its mandate of supporting green industrialisation and a just transition because its portfolio remains heavily concentrated in the carbon-intensive mining energy complex. In fiscal year 2024, 37.2% of its R94 billion portfolio was in mining and metals, 29.4% in manufacturing, and 12.8% in energy.
• The IDC's classification as a 'self-financing' Schedule 2 entity under the Public Finance Management Act (1999) makes it vulnerable to capital market shocks. Because it relies on internally generated funds and commercial borrowings, it operates like a commercial bank, which impairs its ability to provide the patient, long-term capital (20 to 30 years) required for a just energy transition.
• The IDC's lending practices are characterized by a risk-averse profile and a lack of concessionality. Most loans are provided at market rates or slightly below, and the institution lacks standard grace periods, typically only granting an interest moratorium for the first 12 months on a case-by-case basis.
• The governance of the IDC is skewed toward the private sector, specifically large firms in mining, energy, and finance. Six out of ten board members are from the private sector, and many have served for 9 to 13 years, leading to a bias that aligns with the mining energy finance complex rather than a diverse socio-economic representation.
• The IDC performs poorly regarding international standards of transparency and accountability. A study by the Centre for Environmental Rights (CER) ranked the IDC last among six studied DFIs, giving it a score of 0.8 out of 10, primarily because its formal policies are not publicly available.
• South Africa's annual climate financing needs are estimated between R334 billion and R535 billion to reach net-zero by 2050, but actual annual average finance between 2019 and 2021 was only R131 billion. In 2023, DFIs contributed only 7.6% of climate finance in the country.

APA

Stott, J., & Chikowore, A. (2025). THE SCALING UP OF DEVELOPMENT FINANCE INSTITUTIONS IN CLIMATE FINANCE PROVISION TO SUPPORT LOCALISATION AND WORKER TRANSITIONS. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2025/02/IEJ-policybrief-DFI.pdf

Chicago

Stott, Joan, and Adrian Chikowore. THE SCALING UP OF DEVELOPMENT FINANCE INSTITUTIONS IN CLIMATE FINANCE PROVISION TO SUPPORT LOCALISATION AND WORKER TRANSITIONS. Institute for Economic Justice, 2025. https://iej.org.za/wp-content/uploads/2025/02/IEJ-policybrief-DFI.pdf.

Wikipedia

{{cite report |last1=Stott |first1=Joan |last2=Chikowore |first2=Adrian |title=THE SCALING UP OF DEVELOPMENT FINANCE INSTITUTIONS IN CLIMATE FINANCE PROVISION TO SUPPORT LOCALISATION AND WORKER TRANSITIONS |publisher=Institute for Economic Justice |date=February 2025 |url=https://iej.org.za/wp-content/uploads/2025/02/IEJ-policybrief-DFI.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stott2025scaling, author = {Stott, Joan and Chikowore, Adrian}, title = {{THE SCALING UP OF DEVELOPMENT FINANCE INSTITUTIONS IN CLIMATE FINANCE PROVISION TO SUPPORT LOCALISATION AND WORKER TRANSITIONS}}, institution = {Institute for Economic Justice}, year = {2025}, month = feb, url = {https://iej.org.za/wp-content/uploads/2025/02/IEJ-policybrief-DFI.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }