Johannesburg, May 27, 2024 – IFC today announced a partnership with FirstRand Bank Limited (FirstRand) to support and scale the availability of green building and green home loan finance for South Africans, stimulating economic growth and boosting climate resilience in the country.
IFC will provide a $250 million senior loan to FirstRand, South Africa's second largest bank by balance sheet, to further scale-up the bank's lending to property developers and home buyers for green buildings. Designated portions of the home loan portfolio will be specifically allocated to the affordable housing segment and to women.
The investment comprises an IFC loan of up to $200 million, and a loan of up to $50 million from the Managed Co-Lending Portfolio Program, IFC's syndications platform for institutional investors. IFC will also provide capacity building to FirstRand's appraisers, loan officers, and internal teams, and to its construction partners. IFC will advise on FirstRand's product development, as needed.
"We are pleased to continue to partner with IFC to deliver sustainable financing solutions particularly anchored to developers of green buildings, affordable housing, and women borrowers. This is in line with the bank's ambition to facilitate growth in home ownership, particularly for low-income customers and women, in a climate responsible way," said Bhulesh Singh, FirstRand Group Treasurer.
"IFC's partnership with FirstRand will not only provide vital funding for access to housing but also expand green-certified construction loans and home mortgages in South Africa, helping the housing sector become more climate friendly and resilient," said Cláudia Conceição, IFC's Regional Director for Southern Africa. "By scaling climate finance and strengthening green finance standards, we are also encouraging other financial institutions to do the same."
This investment will benefit from a performance-based incentive (PBI), supported by IFC and the German Government's Federal Ministry for Economic Affairs and Climate Action (BMWK) Partnership, IFC's first such blended finance investment with the BMWK, in addition to the United Kingdom-IFC Market Accelerator for Green Construction (MAGC) Program. FirstRand will allocate the PBI to eligible developers and buyers constructing green buildings or purchasing green homes.
Green homes are residential properties that are certified for reducing water, energy, and or materials use under an eligible green building certification program, including IFC's EDGE. Green home loans are used to finance the purchase of houses that meet equivalent green building standards.
Under the Paris Agreement, South Africa aims to reduce its GHG emissions by 42 percent by 2025, with green buildings designated as a major part of the solution to meet its targets.
Since 2020, IFC has invested and directly mobilized US$1.5bn in green and sustainable investments in South Africa through its financial institutions' partners, with a focus on renewable energy and green buildings.
About IFC
IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
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About FirstRand Bank Limited
FirstRand Bank Limited (FRB or the bank) is a wholly owned subsidiary of FirstRand Limited (FirstRand or the group), which is listed on the Johannesburg Stock Exchange (JSE) and Namibian Stock Exchange (NSX). The bank provides a comprehensive range of retail, commercial, corporate and investment banking services in South Africa and offers niche products in certain international markets. The bank has three major divisions which are separately branded: First National Bank (FNB), WesBank and Rand Merchant Bank (RMB). For more information, visit www.firstrand.co.za.
About the IFC-BMWK Climate Blended Finance Partnership
IFC and the German Government's BMWK have partnered to complement the existing "Scaling Up Climate Finance through the Financial Sector" Program with a blended concessional finance component. The BMWK's EUR€30 million blended finance contribution is expected to enable at least US$600 million in IFC own-account and private sector mobilization by de-risking investments. The Program is designed to increase climate lending by participating banks in Egypt, Mexico, the Philippines, and South Africa to 30 percent of their portfolios by 2030, while reducing exposure to coal.
About the UK-IFC Market Accelerator for Green Construction Program
The UK-IFC MAGC is the first UK-IFC bilateral partnership in blended concessional finance for climate change mitigation. By accelerating the construction of certified green buildings, the program aims to mobilize $2 billion in investments to help mitigate climate change. The U.K. government's contribution is used to catalyze construction markets by incentivizing the development of green buildings through certification with IFC's Excellence in Design for Greater Efficiencies (EDGE) and other leading certification systems.
