Johannesburg, South Africa, July 21, 2023—To increase access to climate and affordable housing finance in South Africa, IFC and Standard Bank today announced a partnership to expand renewable energy funding and boost access to affordable residential housing mortgages, with a special focus on first time women borrowers.
IFC will provide a loan of up to $250 million to help Standard Bank scale up its climate finance portfolio, including by investing in renewable solar and wind energy projects. The renewable energy investments will help reduce an estimated 85,000 tons of greenhouse gas (GHG) emissions per year by 2030.
The bank will also use the funding to expand access to housing finance, with at least 50 percent of the mortgages earmarked for women home buyers. This will help address the country's growing housing shortage, which is estimated at 3.7 million homes.
Commenting on the facility, Kenny Fihla, Chief Executive for Corporate and Investment Banking at Standard Bank Group said, "The transaction supports the Group's commitment to our purpose, Africa is our home, we drive her growth through financing to support sustainable growth across the continent in critical areas of renewable energy and affordable housing".
"Increasing access to climate and affordable housing finance will help South Africa achieve sustainable and inclusive economic growth," said Adamou Labara, IFC Country Manager for South Africa. "IFC's partnership with Standard Bank supports the country's transition to a low-emissions and climate resilient economy and will expand access to affordable housing and improve the quality of life for South Africans."
South Africa's economy is mainly driven by coal, which accounts for 80 percent of the energy mix. IFC's investment in Standard Bank will play a significant role in reducing South Africa's heavy reliance on coal-powered energy, help diversify the energy mix and address the country's urgent energy crisis that is disproportionately affecting lower income populations.
IFC's partnership with Standard Bank will address the housing deficit and affordability challenges by offering affordable mortgages especially to low-income earners. South Africa has a well-developed housing finance market with a 16.3 percent mortgage finance rate, which is higher than the 5.1 percent average in sub-Saharan Africa. However, much of the mortgage lending is to higher income segments.
Standard Bank will ensure its climate finance and affordable housing programs adhere to the green and social loan principles developed by the Loan Market Association (LMA), a market-led body that develops industry best practices and standard documentation. The bank's programs will also align with South Africa's Green Finance Taxonomy, which was published in 2022 with support from IFC.
IFC's financing package to Standard Bank includes a trust loan of $21.4 million under the Managed Co-Lending Portfolio Program (MCPP) One Planet along with a $228.6 million loan for IFC's own account.
The investment aligns with IFC's strategy to promote climate finance and to sustainably address the housing shortage in South Africa, using private financing solutions. It builds on IFC's investment in Standard Bank in 2020 to help the bank issue a green bond to increase access to climate finance.
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 2022, IFC committed a record $32.8 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 Standard Bank
Standard Bank is the largest African bank by assets with a unique footprint across 20 African countries. Our strategic position enables us to connect Africa to other select emerging markets as well as pools of capital in developed markets, and our balanced portfolio of businesses provide significant opportunities for growth. The bank has over 54 000 employees, over 1 200 branches and 8815 ATMs on the African continent enabling it to deliver a complete range of services across personal and business banking, corporate and investment banking, and wealth management. Standard Bank's Corporate & Investment Banking division offers its clients banking, trading, investment, risk management and advisory services to connect selected emerging markets to Africa and to each other. It has strong offerings in mining and metals; oil, gas, and renewables; power and infrastructure; agribusiness; telecommunications and media; and financial institutions. For further information, go to http://www.standardbank.com
