Maverick Citizen

Maverick Citizen: #Budget2020

It’s crucial that Mboweni confronts the climate crisis 

A carcass of a cow lies in a dried-out cachment dam in Senekal, Free State. (Photo by Gallo Images / Dino Lloyd)

The world has entered a crucial decade for turning the climate crisis around. South Africa’s 2020 Budget is where we should look for signals of the political will to take measures to meet targets for reducing carbon dioxide emissions agreed to under the UN Framework Convention on Climate Change.

Addressing the climate crisis is meant to be high on South Africa’s political and economic agenda. South Africa signed up to the Paris Agreement in 2015 where nations agreed to a legally binding commitment to limit global temperature rise to no more than 2oC above pre-industrial levels and work to limit this to 1.5oC

The signatory countries also offered national pledges, known as the Nationally Determined Contributions (NDCs), to cut or curb their greenhouse gas emissions by 2030. Later this year the pledges that South Africa and other countries made in 2015 will be reviewed for the first time at the 26th United Nations Climate Change Conference, known as the Conference of the Parties (COP26), scheduled to take place in Glasgow, Scotland in November.

Before then, South Africa needs to strengthen its ambition and efforts to ensure the country does its part in ensuring that global temperature rise does not exceed the 1.5C warming threshold. President Cyril Ramaphosa acknowledged the threat of climate change and the need to move to a low carbon economy during his SONA address. He called it “humankind’s greatest existential threat”.

The upcoming Budget speech is an opportunity for Finance Minister Tito Mboweni to move beyond words of acknowledgement on the severity of the crisis, towards demonstrating South Africa’s intention to address the social, economic and ecological challenges of climate change. 

We’ve seen the rising costs of climate disaster and the pressures it has on the economy and financial systems. Yet South Africa’s public finance institutions continue to invest in coal at a rate that suggests the country will not be able to meet emissions reduction targets.

Coal power plants are among the major contributors to the climate crisis. Not only do they play a significant role in polluting air and water that puts affected communities’ health at risk, but our reliance on them spurs extreme and frequent droughts across the country, driving up food prices, which has severe impacts on the welfare of South African households

As private commercial banks increase their focus on the risks climate change has on their operations, South African public finance institutions such as the Development Bank of Southern Africa (DBSA) and Industrial Development Corporation (IDC) are failing to publicly account for how they are responding to the climate crisis. As institutions with mandates to finance sustainable development to serve the public interest, they are failing to provide transparency around the impacts of their investments and are failing to lead on the phase-out of coal, oil and gas from their financing activities. Although these institutions are committed to helping the country align to the climate goal of 1.5°C as set under the Paris Agreement, they have not yet committed to stop financing fossil fuel infrastructure and urgently need to raise their ambitions to avoid the worst impacts of climate change. 

In the face of climate change, the upcoming Budget speech is an opportunity for the minister of finance. Mboweni is appointed to take care of the country’s fiscal and economic resources and should insist that the DBSA and IDC phase out fossil fuel lending, and use their financial power to support a just transition to renewable energy.

While we know that Eskom will be a key feature of the Budget speech, Mboweni needs to ensure that the climate crisis is also taken into account. Climate change should be addressed with the same fervour and urgency as the crisis at Eskom. 

Addressing the climate crisis in a just and equitable manner means that we need to go beyond the “business as usual” approach. Calls for more investments in coal, with proclamations about the virtues of “clean coal” are not the way to go. “Clean coal” is a pipe dream and there are cheaper ways to achieve optimal power generation to meet South Africa’s energy needs. The country’s energy crisis is an opportunity for the government to reform Eskom and embrace a “state-led renewables drive based on a just transition for workers”.

Both the DBSA and IDC invest in and lend large amounts of money (including public money transferred from the government) to infrastructure development projects. A significant amount of these funds is used to finance the energy sector. For example, the DBSA is involved in 33 renewable energy projects worth R17-billion. Positive steps like this could be undermined by directly financing the production or the burning of coal which undercuts progressive climate action.

In July 2019, the IDC, which has a 5% stake in the Makhado coal project, approved a R245-million loan to an Australian mining company to develop a large open-cast coal mine in the Limpopo Valley. Should this development, which is being hotly contested by local communities, businessmen and farmers, go ahead, the impact on livelihoods and the natural environment which people rely on could escalate poverty and unemployment in the area. 

Any further support for destructive development projects through the use of public finance, whether it be exploration for, mining or burning of coal should be strongly opposed. It will not only undermine the country’s ability to do its part to reduce global carbon emissions, but will mean that South Africa will be stuck with outdated technology while the rest of the world will have invested in alternatives that are cheaper, more efficient and are able to employ more people.

Inaction on climate change will affect young people the hardest. While the sustainability of Eskom is a critical issue, Mboweni needs to confront the climate crisis during his speech and call on the DBSA and the IDC to initiate fossil fuel phase-out policies and prioritise a just transition to a low carbon future. 

A business as usual response to the climate crisis is no longer an option. Climate justice has to be at the heart of turning the state of South Africa around. MC/DM

 Ahmed Mokgopo is the Africa regional campaigner at


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