IFC and Standard Bank announced US$250 million partnership to expand renewable energy funding and boost access to affordable residential housing mortgages

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  • To increase access to climate and affordable housing finance in South Africa, the International Finance Corporation (IFC) and Standard Bank have 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  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.

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.

Author: Bryan Groenendaal


1 Comment

  1. Sjoe… I cant respect Standard Bank. If there ever was a business that actively competes against it’s own customers it is this crowd. Refusing to finance projects unless they provide the equipment.

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