IFC, a member of the World Bank Group, has announced a loan to FirstRand Bank Limited to enable increased financial and advisory support to energy-efficient and water-smart projects in South Africa, helping the country meet climate emission and other environmental targets.
FirstRand will use the funds to finance green projects for its South African corporate and SME clients and to support climate and water smart infrastructure, agriculture, and manufacturing initiatives in the country.
The $225 million loan includes $75 million from the Dutch entrepreneurial development bank (FMO).
The transaction is part of IFC’s broader objective to develop South Africa’s climate finance market and to support the Government of South Africa’s plan to shift to a lower-carbon economy.
South Africa has set the goals of reducing greenhouse-gas emissions by 42% by 2025 and diversifying its electricity production away from coal by 2050.
Andries du Toit, FirstRand’s Group Treasurer, said, “This transaction will provide FirstRand with valuable additional capacity to enable the group to assist our clients participating in the growth of South Africa’s green economy.”
Adamou Labara, IFC’s Country Manager for South Africa, said, “Supporting increased access to green and blue financing is critical to fostering a more inclusive, resilient, and sustainable response to growing climate risks on economic development. Our partnership with FirstRand is especially important now as South African businesses recovering from the COVID-19 crisis look to develop sustainable projects.”
IFC will support its investment with technical assistance in the areas of impact monitoring, water stress management, and other sustainability-linked solutions for clients looking to reduce their carbon footprints.
Supporting financial institutions to expand access to green financing is critical to a successful transition in South Africa, as commercial banks currently provide 45 percent of the financing for renewable energy and energy-efficient projects.