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In a bid to enhance access to finance for renewable energy and affordable housing initiatives in South Africa, the International Finance Corporation (IFC) has announced a partnership with Standard Bank Group, one of Africa’s largest banking conglomerates.
IFC’s commitment of a $300 million sustainable Tier 2 capital loan to Standard Bank South Africa, a subsidiary of Standard Bank Group, aims to facilitate lending for renewable energy projects and home loans targeted at low-income homebuyers in South Africa. Notably, half of the loan allocation will be earmarked for home loans to women borrowers.
Of the $300 million loan, IFC directly sponsored $260 million, while the remaining $40 million was mobilized from commercial investors.
This financing initiative comes at a crucial time for South Africa, which grapples with an energy crisis largely fueled by reliance on coal, constituting 80% of its energy mix. By reducing dependence on coal-powered energy, IFC’s funding is poised to play a pivotal role in the country’s transition to cleaner energy sources. Additionally, it aims to address the pressing need for affordable housing, with South Africa facing a housing deficit of approximately 3.7 million dwellings, primarily in the low-cost housing segment.
Kenny Fihla, CEO of Corporate and Investment Banking at Standard Bank Group, expressed satisfaction with the successful conclusion of the $300 million sustainable loan, emphasizing its significance in supporting the bank’s social and environmental objectives. He hailed the partnership with IFC as a means to drive positive impact across the continent.
Adamou Labara, IFC Country Manager for South Africa, underscored the shared vision between IFC and Standard Bank towards a sustainable future and their commitment to fostering economic growth in South Africa. He highlighted the loan’s role in facilitating the country’s transition to a low-carbon economy and expanding access to affordable housing.
Standard Bank’s sustainable finance division remains focused on delivering financial products and services that promote positive sustainability outcomes, including green and social loans and bonds, sustainability-linked financial solutions, and impact investing.
Aligned with IFC’s strategy to promote climate-friendly investments and address South Africa’s housing shortage through private sector participation, this funding initiative builds on the longstanding partnership between IFC and Standard Bank. Notably, in 2020, IFC invested $200 million in Standard Bank’s inaugural offshore green bond, followed by a $250 million loan in 2023 to bolster Standard Bank’s climate finance portfolio.
The collaboration between IFC and Standard Bank Group signifies a significant step towards advancing renewable energy and affordable housing agendas in South Africa. With a focus on sustainability and climate-friendly investments, this partnership aims to drive positive social and environmental impact while addressing critical developmental challenges in the region. |
