In a strategic move to bolster access to finance for renewable energy and affordable housing projects in South Africa, the International Finance Corporation (IFC) has joined forces with Standard Bank Group, a leading African banking conglomerate.
The partnership involves IFC’s commitment of a $300 million sustainable Tier 2 capital loan to Standard Bank South Africa, a subsidiary of Standard Bank Group. This funding is earmarked to facilitate lending for renewable energy initiatives and home loans targeted at low-income individuals. Notably, half of the loan allocation will be dedicated to home loans for women borrowers.
IFC directly sponsored $260 million of the $300 million loan, with the remaining $40 million mobilized from commercial investors.
This financing initiative comes at a critical juncture for South Africa, which faces an energy crisis largely attributed to its heavy reliance on coal, constituting 80% of its energy mix. By supporting a shift away from coal-powered energy, IFC’s funding is expected to play a significant role in South Africa’s transition to cleaner energy sources.
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Additionally, it aims to address the urgent need for affordable housing, with the country facing a housing deficit of approximately 3.7 million dwellings, particularly 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, highlighting its importance in supporting the bank’s social and environmental objectives. He praised the partnership with IFC as a means to drive positive impact across the continent.
Adamou Labara, IFC Country Manager for South Africa, emphasized the shared vision between IFC and Standard Bank towards a sustainable future, highlighting the loan’s role in facilitating South Africa’s transition to a low-carbon economy and expanding access to affordable housing.
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Standard Bank’s sustainable finance division remains committed to 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. 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 marks 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.
