British International Investment (BII), the United Kingdom’s development finance institution, and FirstRand Group, one of Africa’s largest financial services institutions, have announced a pioneering $150 million financing facility designed to accelerate transition finance projects across the African continent. The partnership marks a significant milestone in addressing climate change challenges while safeguarding economic growth and employment across the region.
The facility, announced on November 25, 2025, represents BII’s first dedicated investment in transition finance, reflecting the institution’s evolving commitment to supporting climate action in emerging markets. According to recent reporting, the funding will be channeled through FirstRand’s business banks—Rand Merchant Bank (RMB) and First National Bank (FNB)—targeting high-emission companies willing to adopt cleaner technologies and lower-carbon practices.
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Understanding Transition Finance in the African Context
Transition finance plays a vital role in enabling high-emitting sectors to decarbonise in alignment with the Paris Agreement, the landmark 2015 international treaty that aims to limit global warming to well below 2°C above pre-industrial levels, with efforts to limit the increase to 1.5°C. Unlike traditional green finance, which typically supports already-clean technologies and projects, transition finance specifically targets industries that are economically essential yet difficult to decarbonise—often referred to as “hard-to-abate” sectors.
These sectors include heavy industry, mining, cement production, steel manufacturing, chemicals, and transportation—industries that form the backbone of many African economies but also contribute significantly to greenhouse gas emissions. By directing capital to these industries, transition finance helps accelerate the shift to low-carbon economies without compromising development objectives or displacing workers who depend on these industries for their livelihoods.
The concept is particularly crucial for Africa, where economic development needs must be balanced with climate commitments. Many African nations face the dual challenge of lifting millions out of poverty while simultaneously reducing their carbon footprints. Transition finance offers a pathway that acknowledges these realities, providing financial support for gradual, pragmatic decarbonisation rather than demanding immediate cessation of high-emission activities.
The Partnership Structure and Technical Assistance
Through this partnership, BII will provide both capital and technical assistance to establish FirstRand’s transition finance framework and practices. This comprehensive approach goes beyond simply providing funding—it involves building institutional capacity, developing robust methodologies for assessing transition projects, and creating standards for measuring and reporting on decarbonisation progress.
The technical assistance component is particularly significant, as it will help FirstRand develop the expertise needed to evaluate transition projects effectively. This includes assessing whether proposed investments genuinely contribute to emissions reductions, ensuring that transition plans are credible and time-bound, and monitoring progress against established benchmarks.
All financing under the BII facility will adhere to His Majesty’s Government’s policy for financing fossil fuels overseas, ensuring that the investments align with broader UK climate commitments. This policy framework provides guardrails that prevent the financing from supporting projects that would lock in long-term fossil fuel dependence or undermine global decarbonisation efforts.
The collaboration also aims to raise market awareness of transition finance as a viable and scalable solution for climate resilience and establish it as a novel asset class across Africa. This market-building objective is crucial, as transition finance remains relatively underdeveloped compared to traditional green finance, particularly in emerging markets.
FirstRand’s Banking Infrastructure: RMB and FNB
FirstRand’s corporate and investment banking arm, RMB, represents the group’s activities across corporate and institutional segments in South Africa and throughout the broader African continent. RMB has established a reputation for innovative financial solutions and maintains operations in over 35 countries across Africa, providing it with extensive reach and deep understanding of the continent’s diverse business landscapes.
First National Bank (FNB), the oldest bank in South Africa with roots tracing back to 1838, handles the group’s retail and commercial banking operations. FNB’s commercial banking division serves small and medium-sized enterprises, providing it with access to a broad base of potential transition finance clients across various sectors and geographies.
The combination of RMB’s corporate expertise and FNB’s commercial banking relationships creates a comprehensive platform for deploying transition finance throughout the economy. This two-pronged approach allows FirstRand to serve both large industrial operations and smaller commercial enterprises seeking to reduce their carbon footprints.
South Africa’s Climate Finance Challenge
The announcement comes at a critical juncture for climate finance in Africa, and particularly for South Africa, which faces a substantial financing gap in meeting its climate commitments. According to the 2025 South African Climate Finance Landscape study, the country mobilized an annual average of approximately 188 billion rand ($10.4 billion) for climate-related projects between 2022 and 2023, marking record levels of climate investment.
However, these figures fall far short of what is needed. Experts estimate that South Africa may require up to 500 billion rand annually to meet its climate goals, leaving a potential annual financing gap exceeding 300 billion rand ($16.7 billion). This massive shortfall highlights the urgency of innovative financing mechanisms like transition finance.
A significant portion of current climate funding in South Africa is allocated to renewable energy projects such as wind and solar farms. While these investments are crucial, only a small share of funding supports initiatives helping communities adapt to climate change or transition away from coal-dependent industries. This imbalance underscores the need for transition finance that specifically addresses the challenges faced by high-emitting sectors and the communities dependent on them.
The climate finance gap extends beyond South Africa to encompass the entire African continent. Adaptation finance remains particularly scarce, even though Africa is disproportionately affected by climate change despite contributing minimally to historical greenhouse gas emissions. The continent’s climate finance needs are estimated to run into the hundreds of billions of dollars annually, far exceeding current investment flows.
Timing and Context: G20 Summit and Global Climate Finance
The facility’s announcement carries additional significance as it coincided with the conclusion of the first African G20 Summit in South Africa, which emphasized climate finance as a central theme. Antony Phillipson, British High Commissioner to South Africa, highlighted this strategic timing in his comments on the partnership.
“I am delighted that this investment partnership has closed just as the first African G20 has concluded with a focus on climate finance,” said Phillipson. “This is a powerful example of how UK partnership with South Africa and others across the continent can drive innovation, sustainability, and energy security. A first of its kind for BII, this catalyses UK DFI investment in the Just Energy Transition Partnership, demonstrating our commitment to cleaner, more resilient and more just economic development in communities across the country.”
The Just Energy Transition Partnership (JETP) referenced by Phillipson is an international financing cooperation mechanism designed to help coal-dependent emerging economies make a just energy transition away from coal. For South Africa, the JETP has mobilized commitments of approximately $11.7 billion, though this represents only a fraction of the total financing needed.
The BII-FirstRand facility demonstrates how bilateral development finance can complement multilateral initiatives like the JETP, providing additional capital and technical expertise while leveraging existing banking infrastructure to reach a broader range of companies and sectors.
Strategic Importance for British International Investment
For BII, this facility represents a strategic expansion into a new area of climate finance. Stephen Priestley, Managing Director and Head of Financial Services Group, and Industries, Technology and Services at BII, emphasized the significance of this move for the institution’s broader climate strategy.
“We are delighted to partner with FirstRand, Africa’s leading financial institution, to advance transition finance across the continent,” said Priestley. “This investment marks a pivotal step in our strategy to accelerate decarbonisation where it matters most. By channelling our capital into high-emitting and hard to abate sectors, while safeguarding jobs and growth, we are setting a precedent for Africa. This reinforces BII’s commitment to climate resilience and innovative financial solutions that deliver impact at scale.”
The facility aligns with BII’s mandate to support sustainable economic development in developing countries while generating returns for the UK taxpayer. By focusing on transition finance, BII is addressing a critical gap in climate finance markets while potentially catalyzing much larger flows of private capital into decarbonisation efforts.
BII has significantly expanded its African investments in recent years. In 2024, the institution committed £1.09 billion to African companies, representing a nearly 40% increase from the previous year’s total of £725 million. This growth demonstrates BII’s increasing focus on the continent and its willingness to deploy substantial capital in support of development objectives.
The transition finance facility represents a natural evolution of BII’s climate strategy. While the institution has long supported renewable energy projects and other clearly “green” investments, this facility acknowledges that achieving climate goals will require engaging with and transforming high-emission industries, not simply avoiding them.
FirstRand’s Technical Expertise and Framework Development
Mary Vilakazi, CEO of FirstRand, highlighted both the potential of transition finance and the technical expertise that the group is bringing to the initiative. “Transition finance is a powerful enabler for a vast array of companies that, in turn, make a meaningful contribution to decarbonisation, through investing in more efficient, climate resilient business practices and processes. We are pleased to partner with BII to further promote transition finance opportunities,” said Vilakazi.
She specifically praised the role of RMB in developing FirstRand’s transition finance framework: “We are also proud of the exceptional level of technical expertise the group’s corporate and investment bank, RMB, contributed to developing FirstRand’s transition finance framework. RMB is demonstrating its strong credentials in this space, both locally and across the African continent.”
The development of a robust transition finance framework is crucial for the success of this initiative. Such frameworks typically include methodologies for assessing the credibility of transition plans, metrics for measuring progress toward emissions reductions, and governance structures to ensure accountability. They must balance the need for rigorous climate standards with practical recognition of the complexities involved in transforming heavy industries.
FirstRand’s framework will need to address several key questions for each potential investment: What is the current emissions baseline? What is the target emissions level and timeline? What specific technologies or process changes will enable the transition? How will progress be measured and verified? What happens if milestones are not met? These questions are more complex in transition finance than in traditional green finance, where the environmental benefits are often more straightforward.
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Sector-Specific Opportunities and Challenges
The facility is expected to support companies across a range of high-emitting sectors that are essential to African economies. These sectors include mining, which is crucial for many African nations but energy-intensive and carbon-intensive in its operations; manufacturing industries such as cement and steel production that face significant technical challenges in reducing emissions; transportation and logistics companies that are beginning to explore electric vehicle adoption and alternative fuels; and agricultural operations seeking to reduce emissions while maintaining productivity.
Each sector presents unique transition opportunities and challenges. Mining companies, for example, might invest in renewable energy to power operations, electrify vehicle fleets, or improve energy efficiency. Cement manufacturers might transition to alternative fuels or invest in carbon capture technologies. Transportation companies could gradually shift from diesel to electric or hydrogen-powered vehicles. Agricultural businesses might adopt precision farming techniques, renewable energy systems, or improved land management practices.
The facility’s success will depend on its ability to support credible transition plans across these diverse sectors while ensuring that investments genuinely contribute to emissions reductions rather than simply maintaining business as usual. This requires careful due diligence and ongoing monitoring, which is where the technical assistance component of the BII facility becomes crucial.
Broader Implications for African Climate Finance
The BII-FirstRand partnership has implications that extend well beyond the $150 million facility itself. By establishing transition finance as a recognized asset class in Africa, the partnership could catalyze much larger flows of capital from commercial banks, institutional investors, and other financial institutions.
One of the key barriers to scaling climate finance in Africa has been the lack of established frameworks and precedents for assessing and structuring climate-related investments. Many financial institutions lack the technical expertise to evaluate climate projects or are uncertain about how to balance climate objectives with financial returns. The BII-FirstRand facility addresses both challenges by providing capital alongside technical assistance and establishing standards that other institutions can reference and adapt.
The facility also demonstrates how development finance institutions can use their capital strategically to build markets rather than simply providing one-off project financing. By partnering with a major commercial bank like FirstRand, BII is helping to mainstream transition finance within the commercial banking system, where it can eventually be sustained without ongoing concessional support.
For corporate leaders across Africa, the facility signals that transition finance is moving from concept to capital deployment. Companies that might have struggled to secure financing for decarbonisation investments now have a clearer pathway to access capital, provided they can demonstrate credible transition plans and measurable progress toward emissions reductions.
For policymakers, the facility demonstrates how bilateral development finance can complement domestic banking systems without distorting credit markets. Rather than competing with commercial banks or crowding out private capital, BII’s approach seeks to enable and enhance commercial lending by providing risk-sharing mechanisms and technical support.
Addressing the “Just” in Just Energy Transition
A critical element of this facility is its attention to the “just” component of the just energy transition. This concept recognizes that decarbonisation must be undertaken in a manner that protects workers and communities whose livelihoods depend on high-emission industries.
In South Africa, for example, coal mining and coal-fired power generation have historically provided employment and economic opportunities in specific regions. A rapid transition away from coal without adequate support for affected workers and communities could lead to significant social disruption, potentially undermining political support for climate action.
Transition finance addresses this challenge by supporting gradual decarbonisation that allows time for workforce retraining, economic diversification, and social safety net development. Rather than forcing an immediate shutdown of high-emission operations, it provides capital for investments that reduce emissions while maintaining employment—at least in the medium term.
The facility’s structure, channeling funds through both corporate and commercial banking arms, allows it to support both large employers in heavy industry and smaller businesses that provide ancillary services or alternative employment opportunities in transition regions. This comprehensive approach is essential for ensuring that the energy transition benefits all segments of society.
Precedent-Setting Potential for Other Financial Institutions
One of the partnership’s stated objectives is to set a precedent for transition finance in Africa that other financial institutions can follow and scale. This precedent-setting function is arguably as important as the direct climate impact of the $150 million facility itself.
Several elements of the BII-FirstRand partnership could serve as models for other institutions. The combination of capital and technical assistance addresses both the financing gap and the capacity gap that often constrain climate finance in emerging markets. The partnership structure, working through established commercial banks rather than creating new institutions, demonstrates how development finance can leverage existing infrastructure and relationships.
The focus on transition finance for hard-to-abate sectors fills a gap that traditional green finance often neglects. By establishing frameworks and methodologies for assessing transition projects, the partnership is creating tools that other institutions can adopt and adapt for their own markets and portfolios.
If successful, the BII-FirstRand facility could inspire similar partnerships between development finance institutions and commercial banks across Africa and in other developing regions. This could significantly expand the pool of capital available for supporting industrial decarbonisation while maintaining economic development and employment.
Implementation Challenges and Success Factors
Despite its promise, the facility will face several implementation challenges. Assessing the credibility of transition plans is inherently more complex than evaluating traditional green projects. There is a risk of “transition washing,” where companies present superficial changes as genuine decarbonisation efforts. Robust frameworks and vigilant monitoring will be essential to prevent this.
Measuring and verifying emissions reductions in industrial settings can be technically challenging and resource-intensive. The facility will need to establish clear protocols for emissions measurement and reporting, along with mechanisms for independent verification.
Political and economic volatility in many African markets could affect the long-term viability of transition investments. Currency fluctuations, regulatory changes, or shifts in government priorities could complicate implementation of multi-year transition plans.
Some stakeholders in the climate finance community remain skeptical of transition finance, fearing that it could perpetuate fossil fuel dependence or delay necessary systemic changes. The facility will need to demonstrate that it is genuinely accelerating decarbonisation rather than simply financing business as usual.
Success factors for the facility will likely include rigorous selection criteria that ensure supported companies have credible transition plans and realistic timelines; robust monitoring and reporting mechanisms that provide transparency and accountability; technical support that genuinely builds institutional capacity rather than creating ongoing dependency; flexibility to adapt to diverse sectoral contexts while maintaining consistent climate standards; and effective communication that builds broader market understanding and acceptance of transition finance.
Timeline and Expected Outcomes
While specific timelines for the facility’s deployment were not detailed in the announcement, transition finance typically involves multi-year commitments that reflect the gradual nature of industrial transformation. Companies might receive financing for specific capital investments—such as energy efficiency upgrades, renewable energy installations, or process optimizations—with disbursement tied to achievement of agreed-upon milestones.
The facility is expected to support transition finance projects across multiple African countries where FirstRand maintains operations. Beyond South Africa, this could include markets such as Botswana, Namibia, Mozambique, Zambia, Ghana, and Nigeria, where FirstRand has established banking relationships and understands local business contexts.
Quantifiable outcomes will likely include metrics such as tons of CO2 emissions reduced or avoided, number of companies supported in their transition journeys, amount of private capital mobilized alongside BII funding, jobs maintained or created in transition sectors, and sector-specific outcomes such as percentage improvement in energy efficiency or adoption of specific low-carbon technologies.
Perhaps most importantly, the facility aims to demonstrate that transition finance is both commercially viable and climate-effective. Proving this could unlock much larger pools of capital from commercial sources that have historically been reluctant to engage with high-emission sectors.
The Future of Transition Finance in Africa
The BII-FirstRand facility arrives at a moment when transition finance is gaining recognition as an essential component of global climate strategy. While renewable energy and other clearly “green” investments will continue to be crucial, there is growing acknowledgment that achieving global climate goals will require actively supporting the decarbonisation of existing high-emission industries.
Africa’s unique circumstances—combining significant development needs with disproportionate vulnerability to climate impacts—make it an ideal testing ground for innovative climate finance approaches. The continent needs economic growth to lift hundreds of millions of people out of poverty, yet this growth must occur within climate constraints that were largely created by industrialized nations.
Transition finance offers a pathway that respects these complexities, providing capital to support gradual, credible decarbonisation while maintaining economic development and employment. The BII-FirstRand facility will test whether this approach can be successfully implemented at scale in African markets.
If the facility achieves its objectives, it could serve as a model for similar initiatives across the developing world. Other development finance institutions might replicate the partnership structure, adapting it to their own markets and mandates. Commercial banks might become more comfortable with transition finance as an asset class, developing their own products and services to meet market demand. And companies in hard-to-abate sectors might increasingly view decarbonisation as an opportunity rather than a burden, supported by accessible financing and technical assistance.
Conclusion: A Pragmatic Approach to Climate Action
The $150 million transition finance facility launched by British International Investment and FirstRand represents a pragmatic, economically informed approach to climate action in Africa. Rather than insisting on immediate perfection or avoiding engagement with high-emission sectors, the partnership acknowledges the complexities of industrial decarbonisation and provides support for companies genuinely committed to reducing their carbon footprints.
By combining capital with technical assistance, partnering with established commercial banks, and focusing on hard-to-abate sectors that are often overlooked by traditional climate finance, the facility addresses multiple barriers that have constrained climate action in Africa. Its precedent-setting potential could catalyze much larger flows of capital into transition finance, accelerating decarbonisation while maintaining economic development and employment.
As global attention increasingly focuses on implementation of climate commitments following the Paris Agreement, innovative financing mechanisms like this facility will be essential. The challenge is not simply mobilizing capital—though that remains crucial—but deploying it strategically in ways that transform high-emission industries while supporting the workers and communities that depend on them.
The BII-FirstRand partnership demonstrates that development finance institutions can play a catalytic role in building markets for climate finance, establishing standards and frameworks that enable commercial capital to flow at scale. For Africa, which faces enormous climate finance needs amid ongoing development challenges, such innovative partnerships offer a realistic pathway toward low-carbon economic growth.
The success or failure of this facility will be measured not only by the direct emissions reductions it enables but also by its ability to demonstrate transition finance as a scalable, replicable model for supporting industrial decarbonisation across Africa and beyond. In this sense, the $150 million facility’s true value may lie less in the capital itself than in the precedent it establishes and the market it helps to build.
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By: Montel Kamau
Serrari Financial Analyst
26th November, 2025
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