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The International Finance Corporation (IFC) will provide a R600 million (~$42m) loan package to Business Partners to finance the construction of green buildings.
This is the IFC’s first loan in South Africa that is exclusively dedicated to green lending for commercial properties. The financial investment will be supported by IFC advisory services to help Business Partners strengthen its green building finance capacity.
The South African non-banking finance entity Business Partners specialises in providing finance, mentorship and support programmes to small and medium-sized enterprises (SMEs).
The loan package is meant to help Business Partners fund environmentally-friendly industrial and retail sites for the use of SMEs. Business Partners will through the loan finance the construction of certified green commercial buildings in South Africa. The money can also be used to renovate existing commercial buildings to make them more environmentally friendly, making them at least 20% more energy efficient. Eligible green building certification includes EDGE, LEED, BREEAM and Green Star.
The IFC will also provide financial incentives to Business Partners to partially offset the cost of greening and certifying a building, based on the company meeting certain green building targets in their portfolio. These incentives are funded by the IFC-UK Market Accelerator for Green Construction programme. This programme is funded by the UK government with the express purpose of scaling up green construction in emerging markets by incentivising financial intermediaries to develop and introduce new green building construction finance products.
Ben Bierman, Business Partners MD, pointed out that South Africa is one of the world’s most carbon-intensive economies which means the country’s green economy has huge market potential. “Through investments into the development of green buildings by the SME sector, we believe we will not only be playing our part in preserving our environment but also contributing to much-needed economic growth, job creation and energy security,” said Bierman.
Conventional buildings account for almost 40% of energy-related greenhouse gas emissions worldwide because of the growing urban population and outdated construction practices.
An IFC study estimates that South Africa’s green building demand presents a $7 billion investment opportunity between 2016 and 2030. Although the supply of green buildings in the country is growing, the green building market is still considered nascent.
By developing green buildings the programme could contribute to South Africa’s Nationally Determined Contributions under the Paris Agreement to reduce greenhouse gas emissions by 42% by 2025.
Adamou Labara, IFC country manager for South Africa said working with Business Partners will contribute to the creation of commercial green buildings in the country.
“Green building development will support South Africa’s economic recovery from COVID-19 and help the country reduce its use of strained water and electricity resources,” said Labara. |
