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IFC partners with FirstRand Bank to expand green building and affordable housing finance in South Africa

THE International Finance Corporation (IFC) has gone into partnership with 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 grant, under the IFC and the German Government’s Federal Ministry for Economic Affairs and Climate Action (BMWK) Partnership and the Market Accelerator for Green Construction (MAGC) Program. FirstRand will allocate the PBI grant 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% by 2025, with green buildings designated as a major part of the solution to meet its targets.
Since 2020, IFC has invested and directly mobilised $1,5-billion green and sustainable investments in South Africa through its financial institutions’ partners, with a focus on renewable energy and green buildings.

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