Johannesburg, South Africa, July 31, 2023—To support the development of certified green buildings in South Africa, IFC today announced a partnership with Absa Bank Limited to help the bank expand its residential and commercial loans and mortgage finance program for buildings that are environmentally responsible and resource efficient.
IFC will provide a loan of up to 4.5 billion South African rand (about $236 million) to support Absa's strategy to expand its green buildings finance portfolio which will include new certified green buildings and mortgages. This will enable Absa to increase access to green building finance for developers and individual home buyers.
In line with its climate strategy, Absa will use the investment to finance environmentally friendly green buildings certified under IFC's Excellence in Design for Greater Efficiencies (EDGE) program as well as similar green building certifications, which helps standardize the design and the certification for resource efficient and climate friendly buildings.
Green buildings represent a significant low-carbon investment opportunity because they can save electricity and reduce water consumption. An IFC study estimates that South Africa's green building demand presents a $7 billion investment opportunity between 2016 and 2030. Although the supply of green buildings in the country is growing, the green building market is still at a nascent stage.
IFC estimates that the project will help reduce over 12,000 tons of emissions annually. The investment will also contribute to South Africa's Nationally Determined Contribution (NDC) targets under the Paris Agreement to reduce GHG emissions by 42 percent by 2025.
"As a responsible corporate citizen, one of our strategic imperatives is to be an active force for good in everything we do, which is key to delivering true long-term value linked to our purpose," said Punki Modise, Absa Group Chief Strategy and Sustainability Officer. "The loan, which includes a performance-based incentive for clients, significantly enhances the resources we have available to support clients in making environmentally responsible and resource-efficient investments in commercial and residential developments, mainly focused on affordable housing."
"Increasing funding for green buildings in South Africa can help the country address power and water shortages and support sustainable economic growth," said Adamou Labara, IFC Country Manager for South Africa. "IFC's partnership with Absa will make it easier for developers and individuals to access green building finance and speed the development of environmentally friendly buildings in the country."
As part of the partnership, IFC will provide performance-based incentives to partly offset the greening and certification costs for green buildings and mortgages financed by Absa under the project, which will benefit end users in the form of reduced utility bills, such as power and water bills.
The incentives are funded by the IFC-UK Market Accelerator for Green Construction (MAGC) program, which is sponsored by the United Kingdom, to scale green construction across emerging markets by incentivizing financial intermediaries to develop and introduce new green building finance products.
IFC will support Absa with advisory services to improve its capacity to originate and manage loans for the development or retrofits of certified green buildings. Absa will also leverage IFC's expertise to gain further knowledge and enhance internal capacity to expand its green buildings business segment.
The investment builds on IFC's 2 billion South African rand (approximately $124 million) loan in 2022, used to support Absa's growth in affordable housing finance in South Africa. It aligns with IFC's strategy to enhance climate change resilience in South Africa by investing in inclusive and sustainable projects.
About IFC
IFC—a member of the World Bank, is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
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About Absa Group
Absa Group Limited is listed on the Johannesburg Stock Exchange and is one of Africa's largest diversified financial services groups. Absa Group offers an integrated set of products and services across personal and business banking, corporate and investment banking, wealth and investment management and insurance. Absa Group owns majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa, Tanzania (Absa Bank Tanzania and National Bank of Commerce), Uganda and Zambia and has insurance operations in Botswana, Kenya, Mozambique, South Africa, and Zambia. Absa also has representative offices in Namibia, Nigeria, and the United States, as well as securities entities in the United Kingdom and the United States, along with technology support colleagues in the Czech Republic. For further information about Absa Group Limited, visit www.absa.africa
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