Explore how South Africa's reliance on a vulnerable energy system is exacerbating economic strains amid geopolitical crises, and discover the urgent need for a community-focused approach to climate finance that prioritises a just transition.
Image: File
The current geopolitical crisis is exacerbating the already strained South Africa’s economy due to our reliance on an energy system that remains vulnerable to global shocks and supply chain disruptions due to ensuing geopolitical crises, induced by the US-Israeli-Iran War.
At the back of the conflict-induced geopolitical crisis remains the existential and escalating climate crisis which demands not only technological innovation but a fundamental reimagining of financial and governance architectures and how it advances growth and development.
The Presidential Climate Commission, Climate Finance Landscape Report, 2025, reveals a striking picture.
South Africa, the continent’s most industrialised economy, mobilises nearly 60% of its climate finance domestically, underscoring a robust financial sector.
Yet, the annual investment gap to meet its Nationally Determined Contributions (NDCs) and net-zero target stands at a staggering ZAR 203–404 billion. Critically, existing flows are skewed towards energy, particularly renewable electricity, captures 74.1% of tracked finance, while adaptation languishes at a mere 11.3%. Even more telling, 78.2% of financing instruments are market-rate debt (45%) and equity (33.2%).
This reliance on commercial debt places the burden of transition on balance sheets, a model ill-suited for community-level initiatives that lack collateral, credit history, or revenue streams in their formative stages.
.Unsurprisingly, finance explicitly tagged for a “just transition” remains modest—averaging only ZAR 16.8 billion annually, largely from governments and development finance institutions (DFIs). The market, left to its own devices, does not deliver justice.
A just transition is not an ancillary concern.
It is a normative framework that centres decent work, social inclusion, poverty eradication, and participatory decision-making. It envisions decentralised, diversely-owned renewable energy systems and equitable resource access.
However, when climate finance is dominated by commercial actors seeking risk-adjusted returns, the most affected communities—those in coal-dependent regions like Mpumalanga—are relegated to the role of bystanders or, at best, recipients of tokenistic programmes.
The lived experience of climate impacts—rising temperatures, intensified storms, flooding, and water insecurity—is rendered invisible by aggregate financial flows.
We need a deliberate financing ecosystem that prioritises community agency.
A recent presentation on financing community-level green initiatives in Africa, anchored in the South African experience, exposes a critical paradox: while climate finance flows are increasing, they remain profoundly misaligned with the principles of a *just transition*.
If the goal is to empower vulnerable communities—the poor, women, and youth—then prevailing market-driven mechanisms are not merely insufficient; they are structurally exclusionary. The evidence from South Africa compels a bold reorientation: from top-down, debt-heavy investment to bottom2-up, community-owned resilience.
The case of Mpumalanga is instructive.
As a province facing severe climatic disruption and the eventual phase-down of coal, its economic diversification cannot be left to abstract market forces.
Genuine opportunity lies in building geography-specific value chains: critical minerals beneficiation, green manufacturing, electric vehicle supply chains, green hydrogen, low-carbon fertilisers, etc. These sectors promise millions of new job opportunities, protect existing ones, reduce poverty, and avoid thousands of premature deaths.
Yet, this potential will remain unrealised without a deliberate financing ecosystem that prioritises community agency.
Socially owned renewable energy offers a compelling alternative to the prevailing ownership structure in the energy generation sector. It requires appropriate governance structures, participatory site selection, and, crucially, a funding nexus that moves beyond conventional bankability – it actively seeks community or worker participation in the local economy, deepening economic democracy.
Herein lies the central argument of this opinion piece: “bankability must be redefined”.
For community-led green initiatives, the project funding nexus cannot begin with commercial loans. It must start with grant funding for business case development, pre-feasibility studies, comprehensive feasibility analysis, and bankability preparation.
Only then should concessional loans, blended finance, and finally commercial debt enter the picture.
This sequenced, de-risking approach recognises that community initiatives are not failed commercial ventures; they are public goods with long-term social, economic, and ecological returns. Current climate finance, obsessed with immediate risk-adjusted returns, systematically undervalues these co-benefits.
Moreover, adaptation finance—the neglected stepchild of climate flows—must be radically scaled and redirected to community-level action. Adaptation is inherently local: early warning systems, drought-resistant agriculture, flood-resilient infrastructure, and water conservation cannot be engineered from afar. Yet, at 11.3% of tracked finance, adaptation remains an afterthought, forcing communities to absorb shocks that strategic investment could mitigate.
Achieving a just transition in Africa requires more than increasing climate finance volumes; it demands a paradigm shift in who decides, who benefits, and who bears risk.
The South African data is a clarion call: commercial logic alone entrenches inequality. Policymakers, DFIs, and philanthropies must prioritise grant-based technical assistance, mandate just transition conditionality, and create dedicated facilities for community-owned renewable energy and adaptation.
Without such measures, the transition will be neither just nor sustainable.
As the presentation’s closing slide reminds us, community agency is not a charitable add-on—it is the missing engine of transformative change.
The question is no longer whether to finance green initiatives, but how to finance them fairly.
Devan Pillay, Executive Manager - Just Transition at the Presidential Climate Commission.
Devan Pillay is the Executive Manager: Institutional Support at the Presidential Climate Commission.
Image: Supplied
Follow Business Report on Facebook, X and on LinkedIn for the latest Business and tech news.