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Africa’s First Green Loan Augurs $588 Billion Investment for IFC
JOHANNESBUR (Capital Markets in Africa) — The World Bank’s International Finance Corp. will provide $150 million to Absa Group Ltd. in what the lenders called Africa’s first certified green loan.
Funds allocated to South Africa’s third-largest bank will be used to lend to the nation’s renewable energy sector and aid its recovery from the Covid-19 pandemic, according to a statement on Thursday. The IFC “estimates that there is a $588 billion investment opportunity in climate mitigation across selected sectors in South Africa between now and 2030.”
The facility is compliant with green-loan principles and requires Absa to disclose credit disbursed to climate-friendly projects. The lender has already structured and arranged 46% of the projects under South Africa’s Renewable Independent Power Producer Program.
The agreement comes as banks and other finance firms globally come under pressure to redirect funding used by industries reliant on fossil-fuels to projects more beneficial for the environment. South Africa, which generates 90% of its electricity from coal, has set targets to reduce greenhouse-gas emissions by 42% by 2025 and its reliance on coal by 2050.