IFC Agrees US$236 Million Green Buildings Loan For South Africa

Absa Bank will expand its green buildings finance programme.

By Sneha A on
7th August 2023

The International Finance Corporation (IFC) has signed an agreement with Absa Bank to help the local lender expand its loans and mortgage finance programme for certified green building projects in South Africa.

Under the deal inked on 31 July, the IFC will provide a loan of up to ZAR4.5 billion (US$236 million) to support Absa's strategy to expand its green buildings finance portfolio, which includes providing funding for developers and mortgages for individual home buyers.

Absa will use the loan to finance green buildings certified under the IFC's Excellence in Design for Greater Efficiencies (EDGE) programme and other similar certification programmes.

An IFC study has estimated that South Africa's green building sector represents a US$7 billion investment opportunity between 2016 and 2030. Although the supply of green buildings has been growing, the market is still at a nascent stage.

The IFC estimates that the Absa funding will help to remove more than 12,000 tonnes of greenhouse gas emissions annually, supporting South Africa's Nationally Determined Contribution targets under the Paris Agreement to cut emissions by 42% by 2025. 

"The [IFC] 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," said Punki Modise, Absa’s chief strategy and sustainability officer. 

As part of its partnership with Absa, the IFC will provide performance-based incentives to help offset the greening and certification costs for green buildings and mortgages financed by Absa, which will benefit end-users in the form of reduced utility bills.

The incentives will be funded by the IFC-UK Market Accelerator for Green Construction (MAGC) programme, which is sponsored by the UK and aims to increase green construction in emerging markets by encouraging financial intermediaries to focus on new green building finance products.

The IFC will also support Absa with advisory services to help improve its capacity to extend and manage loans for the development and retrofit of certified green buildings. 

The new investment builds on the US$124 million loan that the IFC extended to Absa in 2022, aimed at expanding affordable housing finance for lower-to-middle-income households in South Africa.

That funding is intended to help address the country's affordable housing gap, which was estimated at 3.7 million units in 2022. 

Photo: Cape Town view (© Hongqi Zhang | Dreamstime)

Add a comment

ConstructAfrica welcomes lively debate, but will not publish comments that are threatening, libellous or abusive.

Plain text

  • You can align images (data-align="center"), but also videos, blockquotes, and so on.
  • You can caption images (data-caption="Text"), but also videos, blockquotes, and so on.
  • Web page addresses and email addresses turn into links automatically.
  • Allowed HTML tags: <a href hreflang> <em> <strong> <cite> <blockquote cite> <code> <ul type> <ol type start> <li> <dl> <dt> <dd> <h2 id> <h3 id> <h4 id> <h5 id> <h6 id> <img src alt data-entity-type data-entity-uuid data-align data-caption>