WASHINGTON, D.C., Jan. 23—The International Finance Corporation (IFC) has approved financing amounting to US$40 million equivalent for two projects in South Africa. The financing is being provided in local currency and represents IFC's first rand-denominated loans as well as IFC's first local currency loans worldwide.
IFC approved a loan of US$10 million equivalent for Cashbank, a bank established in 1995 by a non-governmental organization, the Group Credit Company, to service the needs and expand lending activities for low-income communities within South Africa through the provision of savings facilities as well as credit for housing, education, and personal loans.
IFC also approved financing amounting to US$30 million equivalent for Unicell Paper Mills (Pty) Limited, to install and operate an integrated tissue paper mill in Germiston. The mill's technology will provide important environmental benefits through its use of waste paper as its raw material thereby reducing the harvesting of trees and offering an alternative outlet to what is normally destined for city dumps. The company is expected to employ about 260 people. Another 100 persons approximately will have the opportunity to independently collect waste paper.
Mr. Cesare Calari, Director of IFC's Sub-Saharan Africa Department said, "Besides local currency lending, employment creation, and the economic empowerment of lower income groups, the projects are also noteworthy for the following reasons. Cashbank will provide sustainable and commercially based financing in the critically important area of low-income housing, whereas Unicell will support regional integration of the SADC (South African Development Community) region and the widening of markets and distribution channels."
Mrs. Farida Khambata, Director of IFC's Treasury Department added, "We are pleased to be able to offer loans in rand to our clients. For companies which do not generate revenues in foreign exchange, this will provide long-term local currency financing and protect clients against risks of local currency depreciation. The availability of a long-term rand/dollar swap market facilitates our ability to offer loans customized to the needs of our clients."
IFC opened an office in Johannesburg in 1994. To date, the Corporation has approved financing of US$100.3 million for 18 projects in South Africa.
IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
