SOUTH AFRICA – Standard Bank South Africa has secured a US$300 million loan from the International Finance Corporation (IFC) to unlock financing for renewable energy projects and support the construction of accessible housing units.

IFC’s sustainable Tier 2 capital loan will allow Standard Bank South Africa to on-lend and support renewable energy projects and home loans to low-income home buyers in South Africa, 50 percent of which will be used for home loans to women borrowers.

The loan comprises US$260 million directly from the IFC and US$40 million mobilized from commercial investors.

“This sustainable loan empowers Standard Bank to assist clients in their environmental and social endeavors further,” stated Kenny Fihla, Managing Director of Standard Bank Group’s Corporate and Investment Banking.

Standard Bank has a proven track record of supporting South Africa’s transition from fossil fuels.

The bank recently collaborated with other financial institutions to secure US$243 million to construct the Ummbila Emoyeni wind farm, a project crucial for reducing the country’s reliance on coal.

South Africa faces an energy crisis fueled mainly by its dependence on coal, representing roughly 80% of its electricity generation.

This dependence has led to power cuts as aging coal-fired power plants struggle to meet demand.

The IFC’s loan will empower Standard Bank to utilize “green and social loans, sustainability-linked instruments, sustainable trade solutions, and impact investments” to promote renewable energy projects.

The loan also addresses South Africa’s significant housing deficit.

The Center for Affordable Housing Finance in Africa (CAHF) estimates a shortage of approximately 3.7 million units, with most demand concentrated in the low-income housing market.

While South Africa boasts a well-developed housing market compared to the sub-Saharan African average (16.3% mortgage penetration rate versus 5.1%), increasing access to mortgages for low-income earners could be a game-changer.

This collaboration between the IFC and Standard Bank presents a promising step forward for South Africa as it strives for a cleaner energy future and a more inclusive housing market.

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