A $300 million loan agreement with Standard Bank South Africa, a subsidiary of Standard Bank Group, aims to unlock financing for renewable energy projects and support the construction of accessible housing units.

The loan comprises $260 million directly from the IFC and $40 million mobilized from commercial investors.

“This sustainable loan empowers Standard Bank to further assist clients in their environmental and social endeavors,” stated Kenny Fihla, Managing Director of Standard Bank Group’s Corporate and Investment Banking.

Standard Bank has a proven track record in supporting South Africa’s transition away from fossil fuels.

The bank recently collaborated with other financial institutions to secure $243 million for the construction of the Ummbila Emoyeni wind farm, a project crucial for reducing the country’s reliance on coal.

South Africa currently faces an energy crisis largely fueled by its dependence on coal, which represents roughly 80% of its electricity generation.

This dependence has led to power cuts as ageing coal-fired power plants struggle to meet demand.

The IFC’s loan will empower Standard Bank to utilize “green and social loans, sustainability-linked instruments, sustainable trade solutions, and impact investments” to promote renewable energy projects.

The loan also addresses South Africa’s significant housing deficit.

The Center for Affordable Housing Finance in Africa (CAHF) estimates a shortage of approximately 3.7 million units, with most demand concentrated in the low-income housing market.

While South Africa boasts a well-developed housing market compared to the sub-Saharan African average (16.3% mortgage penetration rate versus 5.1%), increasing access to mortgages for low-income earners could be a game-changer.

This collaboration between the IFC and Standard Bank presents a promising step forward for South Africa as it strives for a cleaner energy future and a more inclusive housing market.