An IDC guarantee now covers half the risk on ESCO loans to public entities, yet bankers say projects, not money, are holding energy efficiency back. South Africa has capital for energy efficiency, but financiers at the AEE Africa conference in Cape Town could not find enough bankable projects.
That message ran through the opening day of the Association of Energy Engineers (AEE) Africa conference, hosted with the Southern African Energy Efficiency Confederation (SAEEC) on 28 October 2026.
Bankers, development finance institutions (DFIs) and project preparers agreed on the diagnosis. The money is waiting. The pipeline is not.
A strong equity backer and a DFI in the structure make commercial debt far easier to secure.
Rashveer Manilal
Private capital is available
Rashveer Manilal, head of the renewable energy sector at Absa Business Banking, pushed back on a long-held assumption.
“There’s a historic notion out there that private capital is not always available in the energy sector,” he said. “There definitely is private capital available. It’s about how you structure it, and how you deal with the projects.”
He described one client who needed funds within weeks while cheaper DFI funding was still in process. Absa provided a bridging facility for a year, and the client repaid the bank once Industrial Development Corporation (IDC) funds arrived. Manilal added that a strong equity backer and a DFI in the structure make commercial debt far easier to secure.
Faith Mkhacwa, General Manager for Energy Efficiency and Demand Side Management at the South African National Energy Development Institute (SANEDI), highlighted the imbalance with renewables.
“It’s not very hard to raise funding for renewable energy in South Africa and in Africa generally,” she said. “But when you start talking about energy efficiency, it’s a different story.”
Under the EEPBIP, the IDC offers a 50% guarantee to any South African ESCO holding a contract with a public entity.
Guarantees close the collateral gap
For energy service companies (ESCOs), the sticking point is often collateral. Sihlobisile Motlomelo of the IDC’s Partnership Programmes unit explained how the corporation is tackling it.
Under the Energy Efficiency in Public Buildings and Infrastructure Programme (EEPBIP), the IDC offers a 50% guarantee to any ESCO holding a contract with a public entity. “Ordinarily, IDC would not look at those applications,” Motlomelo said. “But because now it comes with the guarantee, that’s the additionality, and it brings them on board.”
The guarantee de-risks the loan, strengthens the ESCO’s collateral and lowers the pricing it receives. The IDC layers this onto ring-fenced concessionary funding, a partnership with the Department of Trade, Industry and Competition (dtic), a blended facility with KfW and investments in private equity funds that back the sector.
The DBSA runs seven standardised programmes so municipalities do not have to reinvent contracts and templates each time.
Projects stall before the bank
If finance is available, why do so few projects close? Shameela Soobramoney, CEO of the National Business Initiative (NBI), pointed to what happens long before a credit committee.
“An energy audit may identify a compelling opportunity, yet a project can remain on its shelf because there’s no budget for preparation, the procurement route is unclear, or the institution lacks the capability to manage delivery,” she said in her keynote.
Johann Lubbe, Head of the Department of Water and Sanitation’s Water Partnerships Office at the Development Bank of Southern Africa (DBSA), saw the same pattern in municipalities. The private sector is keen to fund, supply technology and share expertise, “but the projects aren’t there.” His office runs seven standardised programmes so municipalities do not have to reinvent contracts and templates each time.
Municipal creditworthiness compounds the problem. “It’s not a lack of willingness,” Manilal said. “We’ve got to sit in front of this big bad guy called Credit and put a deal forward. How’s this municipality going to repay?”
Without data, you can’t convince a financier to give you money.
Fenwicks Musonye
Bring financiers in early
Soobramoney argued that the sequence itself is broken. Developers design an infrastructure project and only then invite financiers. “They need to be brought in upfront,” she said.
She called for careful structuring of the capital stack. “Not everything is bankable upfront, but if you want to create the pipelines, you need to be able to bring those different finances together.” Equally important is deciding who owns project preparation, and whether capital requirements shut out small businesses that have the capability but not the balance sheet.
Motlomelo described the quality chain that EEPBIP aims to build:
- SANEDI develops a credible pipeline,
- ESCO contracts follow, then
- escrow arrangements, disbursement and audit.
She explained that each step must be properly structured for funding.
Data lowers the risk
Fenwicks Musonye, Deputy Director Energy Efficiency, Energy and Petroleum Regulatory Authority (delivering the keynote on behalf of the Director General of Kenya’s energy regulator), linked finance directly to measurement.
“The financing sector relies on risk as its greatest indicator of where to invest money,” he said. Risk is a function of information, and information depends on consistent data. In his own words: “Without data, you can’t convince a financier to give you money.”
Kenya is working to revive its ESCO market, Musonye said, and that depends on a steady pipeline of well-financed projects. “People have money. They always look for where they can get easy returns. So we must tell them that there are easy returns in energy efficiency.”
From audit to investment
Soobramoney closed with a practical challenge for public institutions and businesses:
- identify an efficiency opportunity,
- define an accountable owner, and
- establish what it will take to prepare it for investment.
For financiers and development partners, she asked them to engage with the barriers that keep viable projects from reaching a funding decision, and do it early.
