Johannesburg, South Africa, August 1, 2022—To increase access to affordable housing in South Africa, IFC and Absa Bank Limited, one of the leading providers of residential mortgages in the country, have partnered to support the expansion of housing finance targeting lower-to-middle income households in South Africa.
IFC's local currency loan of up to 2 billion South African rand (approximately $124 million) will help expand Absa's affordable housing mortgage portfolio in South Africa, reaching thousands of home buyers.
IFC's partnership with Absa will help address the large affordable housing gap in South Africa, where the housing shortage is estimated at 3.7 million homes. Formal housing solutions are often too expensive for South Africans with low incomes due to high construction costs, limited access to financing, high levels of inequality, poverty, and job insecurity.
Absa will deploy the entirety of IFC's loan to affordable housing mortgages in line with the Banking Association of South Africa's definition for the segment.
"We further elevated the importance of environment, social and governance during a review of Absa's strategy last year," said Punki Modise, Absa Group Chief Strategy and Sustainability Officer. "Within this, inclusive finance is a significant impact area, including affordable housing mortgages, as well as financing SMEs, women-owned businesses and youth," she said.
"Access to affordable housing is key for achieving inclusive and sustainable economic growth in South Africa," said Adamou Labara, IFC Country Manager for South Africa. "IFC's longer-term local currency loan to Absa will help address housing inaccessibility by expanding access to affordable housing finance for lower-to-middle-income households in South Africa."
IFC's funding is also the first "social" loan to a financial institution in South Africa that complies with the Social Loan Principles (SLP) published by the Loan Market Association, which aims to establish best market practice for syndicated loans in Europe, the Middle East and Africa. A social loan finances eligible projects that address social issues or achieves a positive social outcome, including affordable basic infrastructure like affordable housing, energy, clean water, transport, education, and health, food security and socio-economic empowerment.
The loan is expected to contribute to developing South Africa's sustainable finance market by introducing a novel, replicable instrument to raise additional financing for affordable housing and other social causes, in a transparent and credible manner.
"The partnership further cements our relationship with IFC, a key global development finance institution, and follows a $150 million certified green loan agreement in May last year, and a $250 million trade finance loan in November," said Jason Quinn, Absa Group Finance Director.
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 2021, IFC committed a record $31.5 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 the COVID-19 pandemic. For more information, visit www.ifc.org.
About Absa
Absa Group Limited (Absa) is listed on the Johannesburg Stock Exchange and is one of Africa's largest diversified financial services groups. It offers an integrated set of products and services across personal and business banking, corporate and investment banking, wealth and investment management and insurance. Absa operates in 14 countries. It owns subsidiary banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa, Tanzania (Absa Bank Tanzania and National Bank of Commerce), Uganda and Zambia, and has insurance operations in Botswana, Kenya, Mozambique, South Africa and Zambia. It also has representative offices in the United States, Namibia and Nigeria, and securities entities in the United Kingdom and the United States. For further information about Absa Group Limited, please visit www.absa.africa
