The International Finance Corporation (IFC) has announced a ‘green’ partnership with FirstRand Bank Limited (FirstRand, Bank). 

The partnership aims to support and scale the availability of green building and green home loan finance for South Africans, thereby stimulating economic growth and boosting climate resilience in the country. 

Under the Paris Agreement, South Africa aims to reduce its greenhouse gas (GHG) emissions by 42% by 2025, with green buildings designated as a major part of the solution to meet its targets. 

Promoting green homes 

As a member of the World Bank Group, the IFC is the largest global development institution focussed on the private sector in emerging markets. It will provide a $250 million (R4,6 billion) senior loan to FirstRand, South Africa’s second-largest bank by balance sheet. 

This loan is 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. 

Growing home ownership 

“We are pleased to continue to partner with the IFC to deliver sustainable financing solutions particularly anchored to developers of green buildings, affordable housing and women borrowers,” said Bhulesh Singh, FirstRand Group treasurer. 

This is in line with the bank’s ambition to facilitate growth in home ownership, especially amongst low-income customers and women, in a climate-responsible way. 

“The 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 to become more climate-friendly and resilient,” said Cláudia Conceição, the IFC’s Regional Director for Southern Africa. 

Defined market 

This investment will benefit from a performance-based incentive (PBI), supported by the 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 defined as residential properties that are certified for reducing water, energy and/or materials used under an eligible green building certification programme, including IFC’s Excellence in Design for Greater Efficiencies (EDGE). Green home loans are used to finance the purchase of houses that meet equivalent green building standards. 

A new partnership aims to support and scale the availability of green building and green home loan finance for South Africans, especially low-income customers and women. 

Full thanks and acknowledgement go to www.ifc.org for the information in this article.