Electricity bills in South Africa could soon be lower thanks to a partnership between Absa Bank and the International Finance Corporation to finance resource-efficient buildings.
The International Finance Corporation (IFC) is joining forces with Absa to finance green buildings in South Africa. The private sector financing arm of the World Bank Group is lending $236 million (4.5 billion South African rand) to the Johannesburg-based banking group. These funds will enable it “to expand its residential and commercial lending programme and mortgage financing for environmentally friendly buildings”.
The partnership aims to promote the IFC’s Design Excellence for Greater Efficiency (DEGE) programme to property developers. This certification encourages the design of buildings that save resources, particularly water and electricity. It should enable Absa to strengthen its climate finance commitments to its large customer base spread across the African continent (Tanzania, Seychelles, Mauritius, etc.).
“The incentives are funded by the IFC-UK Market Accelerator for Green Construction (MAGC) programme, which is sponsored by the UK, to develop green construction in emerging markets by encouraging financial intermediaries to develop and introduce new green construction finance products,” explains Adamou Labara. According to the head of the IFC in South Africa, these investments should help to reduce 12,000 tonnes of carbon dioxide (CO2) emissions per year. This will contribute directly to the rainbow nation’s Nationally Determined Contribution (NDC) targets under the Paris Agreement.
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In this respect, Absa is also one of the financial partners of the Renewable Energy Independent Power Producer Procurement Programme (REIPPP) initiated by the South African government. In 2021, the IFC granted South Africa’s first certified green loan ($150 million) to the bank headed by Arrie Rautenbach to finance renewable energy projects. The aim is to limit dependence on coal.
Benoit-Ivan Wansi
