IDC and DBSA sign energy deal for seven special economic zones

Two of South Africa’s largest development finance institutions will jointly build and fund power projects inside the country’s Special Economic Zones, under a Memorandum of Agreement signed in Johannesburg on 1 April 2026.

The Industrial Development Corporation and the Development Bank of Southern Africa will collaborate on the development, financing and implementation of energy security projects in the zones, with the stated aim of improving energy resilience, supporting industrial development and enabling sustainable economic growth.

The agreement gives the two institutions a structured pipeline of projects to originate together, co-finance to bankable feasibility stage, and manage through the Industrial Zones Programme Project Management Unit, which sits inside the IDC.

What is already on the ground

The IDC brings an existing portfolio to the partnership. It has R1,9 billion committed across 22 projects in seven special economic zones. Among them are Coega and the Tshwane automotive SEZ, where the corporation’s investment supports black-owned Tier 1 and Tier 2 component manufacturers.

That portfolio is the reason the agreement has something to attach to. Special economic zones are designed to pull in investment and create jobs, and the two institutions argue that reliable power inside the zone fence is what keeps those industries competitive and running without interruption.

Energy is a key input cost and enabler in manufacturing, and both entities appreciate the significance of reliable and affordable energy.

Rian Coetzee, the IDC’s Divisional Executive for Industry Planning and Project Development, said the agreement marked a milestone in building a close working relationship between two entities with strong technical credentials in industrial development.

“We are proud of this partnership with the DBSA, an institution whose objectives align with our mandate,” Coetzee said. “The IDC and DBSA have a strong track record in socio-economic and industrial development both in South Africa and the rest of the continent.”

Dr Phindile Masangane, DBSA Group Executive for Programmes, said the zones are critical engines of industrialisation and job creation, and that past energy constraints have held back their full potential.

“Through this collaboration with the IDC, the DBSA is deploying its full financing and project preparation capabilities to solve that challenge at scale and accelerate the development of energy projects to supply reliable, affordable, low-carbon energy to the zones,” Masangane said.

Where the plan came from

The IDC hosted the inaugural SEZ Energy Security Forum through the Department of Trade, Industry and Competition’s Industrial Zones Programme. The forum put the role of the zones in industrialisation and energy self-reliance on the table and set out a programme on energy security and decarbonisation for the zones. The agreement signed this month is the working arrangement that follows it.

What the agreement commits both sides to

Beyond the general pledge to collaborate, the memorandum sets out four concrete tasks. The two institutions will jointly identify and originate energy projects suitable for implementation inside the programme. They will build and maintain a structured development pipeline. They will co-finance project preparation through to bankable feasibility stage, which is the point at which a project can be taken to lenders and built. And the programme will be managed within the IZP Project Management Unit housed at the IDC.

For manufacturers inside the zones, the effect is straightforward. A project that cannot reach bankable feasibility does not get built, and a plant that cannot get a bankable power supply does not expand. Putting project preparation and development finance behind the same pipeline is intended to move energy projects inside the zones from an idea to a signed supply arrangement.

The IDC was established in 1940 by an Act of Parliament and is wholly owned by the South African government. Its mandate is to maximise development impact through job-rich industrialisation, including funding for black-owned and black-empowered companies, black industrialists, and women and youth-owned enterprises, while remaining financially sustainable. The DBSA works across energy, ICT, transport, water and sanitation, with secondary focus areas in education, housing and health.

The agreement is available on the IDC’s website.

Source: Industrial Development Corporation, IDC and DBSA sign MOA to partner in developing energy projects in SEZs (https://www.idc.co.za/idc-and-dbsa-sign-moa-to-partner-in-developing-energy-projects-in-sezs)