The funding will increase funding for biomass and other renewable energy projects in South Africa, and it will also be supporting the country’s power sector and economic recovery from COVID-19. IFC will provide Absa Bank with a loan of up to USD 150 million to support the bank’s strategy to expand its climate finance business and help South Africa meet its greenhouse gas reduction targets.
The loan is the first certified loan in Africa that complies with the Green Loan Principles. This means that lending by Absa for green projects will be disclosed, improving transparency, and encouraging other banks to follow the principles. In addition to the loan, IFC will provide technical advice and knowledge sharing to help the bank develop a green, social, and sustainable bonds and loans framework.
South Africa has set the goals of reducing its greenhouse-gas emissions by 42% by 2025 and its reliance on coal by 2050. Today, 90% of the country’s electricity is generated by coal-fired plants.
IFC estimates that there is a USD 588 billion investment opportunity in climate mitigation across selected sectors in South Africa between 2021 and 2030. The project with Absa is in line with a climate initiative IFC launched in January 2020 to help financial institutions in South Africa, Egypt, Mexico, and the Philippines to mobilise private sector financing for climate mitigation and adaptation projects and help align financial-sector strategies with Paris Climate Agreement targets.
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