British International Investment (BII), the UK’s development finance institution, has announced a $150 million facility to South Africa’s FirstRand. The funding is designed to help African companies reduce carbon emissions while maintaining access to finance. This marks BII’s first entry into energy-transition lending.
The funding will be channelled through FirstRand’s business banking divisions—RMB and FNB—and specifically targets companies with high emissions that are willing to adopt cleaner technologies and implement lower-carbon practices. Transition finance loans differ from conventional green finance: rather than restricting access, they enable companies to modify operations incrementally while maintaining growth.
Stephen Priestley, BII Managing Director, described the investment as a “pivotal step” in accelerating decarbonization where it matters most, emphasizing support for practical, measurable emissions reductions.
According to the 2025 South African Climate Finance Landscape study, the country raised an annual average of roughly 188 billion rand ($10.4 billion) for climate-related projects in 2022–23. However, experts estimate that South Africa may require up to 500 billion rand annually to meet its climate targets, leaving a financing gap exceeding 300 billion rand each year.
Currently, most climate finance is directed toward renewable power projects such as wind and solar farms. Only a small fraction supports initiatives that help communities adapt to climate change or transition from coal-dependent operations. Domestic institutions contribute nearly 60% of the funding, with commercial banks acting as the largest private financiers.
The BII facility is designed to address part of this gap by providing targeted support to companies that can reduce emissions while sustaining economic activity. By enabling operational transformation rather than halting development, the approach prioritizes both environmental and economic outcomes.
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The loans will allow companies to invest in cleaner technologies, improve energy efficiency, and adopt lower-carbon processes. These improvements are expected to reduce greenhouse gas emissions without jeopardizing business continuity. The facility also sends a signal to other financiers and private companies that transition finance can be viable, scalable, and impactful.
By partnering with FirstRand, BII leverages local expertise in business banking and risk assessment. This ensures that funds are directed toward projects with measurable emissions reductions and strong operational oversight. The hierarchical focus is clear: first, reduce emissions at high-impact companies; second, enable broader market adoption of lower-carbon practices; third, support systemic decarbonization across South Africa’s private sector.
South Africa faces a significant challenge: achieving climate targets while supporting economic growth. This $150 million facility demonstrates how development finance can play a strategic role. By providing transition loans instead of restricting access, BII and FirstRand create a pathway for high-emission companies to adopt sustainable practices.
The initiative reflects a practical, measured approach to climate finance, linking investment to tangible emissions reductions and operational improvements. It also underscores the need for continued collaboration between development institutions, commercial banks, and private companies to bridge the financing gap and accelerate the country’s energy transition.
By Thuita Gatero, Managing Editor, Africa Digest News. He specializes in conversations around data centers, AI, cloud infrastructure, and energy.
