South Africa: IFC Teams Up with Standard Bank to Boost Climate and Affordable Housing Finance

To increase access to climate and affordable housing finance in South Africa, IFC and Standard Bank have announced a partnership to expand renewable energy funding and increase access to affordable residential mortgages, with an emphasis on first-time female borrowers.

Standard Bank will receive a loan of up to $250 million from IFC to expand its climate finance portfolio, including investments in solar and wind energy initiatives. The investments in renewable energy will help reduce greenhouse gas (GHG) emissions by an estimated 85,000 tonnes per year by 2030.

A minimum of fifty percent of the mortgages will be designated for female homebuyers. This will help address the estimated 3.7 million-home housing shortage .

Commenting on the facility, Kenny Fihla, Chief Executive for Corporate and Investment Banking at Standard Bank Group, stated, “The transaction supports the Group’s commitment to our purpose, Africa is our home, and we drive her growth through financing to support sustainable growth across the continent in critical sectors such as 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’s South Africa Country Manager. “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.”

Coal constitutes 80 percent of South Africa’s energy mix and is the primary driver of its economy. IFC’s investment in Standard Bank will significantly contribute to reducing South Africa’s heavy reliance on coal-powered energy, diversifying the energy balance, and addressing the country’s urgent energy crisis, which disproportionately affects low-income populations.

The partnership between IFC and Standard Bank will address the housing deficit and affordability issues by providing affordable mortgages to low-income consumers in particular. The South African housing finance market has a mortgage finance rate of 16.3 percent, which is higher than the sub-Saharan African average of 5.1 percent. However, the majority of mortgage lending goes to segments with greater incomes.

Standard Bank will ensure that its climate finance and affordable housing programmes adhere to the green and social loan principles established by the Loan Market Association (LMA), a market-driven organisation that establishes industry best practises and standard documentation. IFC will assist the bank in aligning its programmes with South Africa’s Green Finance Taxonomy, which was published in 2022.

The financing arrangement provided by IFC to Standard Bank consists of a $21.4 million trust loan under the Managed Co-Lending Portfolio Programme (MCPP) One Planet and a $228.6 million loan for IFC’s own account.

The investment corresponds with IFC’s strategy to promote climate finance and use private financing solutions to sustainably address the housing shortage in South Africa. It builds on IFC’s 2020 investment in Standard Bank to assist the bank in issuing a green bond in order to increase access to climate finance.

To increase access to climate and affordable housing finance in South Africa, IFC and Standard Bank have announced a partnership to expand renewable energy funding and increase access to affordable residential mortgages, with an emphasis on first-time female borrowers.

Standard Bank will receive a loan of up to $250 million from IFC to expand its climate finance portfolio, including investments in solar and wind energy initiatives. The investments in renewable energy will help reduce greenhouse gas (GHG) emissions by an estimated 85,000 tonnes per year by 2030.

A minimum of fifty percent of the mortgages will be designated for female homebuyers. This will help address the estimated 3.7 million-home housing shortage in the United States.

Commenting on the facility, Kenny Fihla, Chief Executive for Corporate and Investment Banking at Standard Bank Group, stated, “The transaction supports the Group’s commitment to our purpose, Africa is our home, and we drive her growth through financing to support sustainable growth across the continent in critical sectors such as 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’s South Africa Country Manager. “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.”

Coal constitutes 80 percent of South Africa’s energy mix and is the primary driver of its economy. IFC’s investment in Standard Bank will significantly contribute to reducing South Africa’s heavy reliance on coal-powered energy, diversifying the energy balance, and addressing the country’s urgent energy crisis, which disproportionately affects low-income populations.

The partnership between IFC and Standard Bank will address the housing deficit and affordability issues by providing affordable mortgages to low-income consumers in particular. The South African housing finance market has a mortgage finance rate of 16.3 percent, which is higher than the sub-Saharan African average of 5.1 percent. However, the majority of mortgage lending goes to segments with greater incomes.

Standard Bank will ensure that its climate finance and affordable housing programmes adhere to the green and social loan principles established by the Loan Market Association (LMA), a market-driven organisation that establishes industry best practises and standard documentation. IFC will assist the bank in aligning its programmes with South Africa’s Green Finance Taxonomy, which was published in 2022.

The financing arrangement provided by IFC to Standard Bank consists of a $21.4 million trust loan under the Managed Co-Lending Portfolio Programme (MCPP) One Planet and a $228.6 million loan for IFC’s own account.

The investment corresponds with IFC’s strategy to promote climate finance and use private financing solutions to sustainably address the housing shortage in South Africa. It builds on IFC’s 2020 investment in Standard Bank to assist the bank in issuing a green bond in order to increase access to climate finance.