Green loan to Absa to boost funding for renewable energy in SA
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AFRICA’S first certified green loan, announced yesterday by the International Finance Corporation (IFC) to Absa Bank, would increase funding for biomass and other renewable energy projects in South Africa, supporting the country’s power sector and economic recovery from Covid-19.
The companies said in a statement that the IFC, a member of the World Bank Group, would provide Absa Bank, one of Africa’s largest financial services groups, with a loan of up to $150 million (R2.1 billion) to support the bank’s strategy to expand its climate finance business and help South Africa meet its greenhouse gas reduction targets.
The loan was the first certified loan in Africa that complied with the Green Loan Principles, which meant that lending by Absa for green projects would be disclosed.
In addition to the loan, the IFC would provide technical advice and knowledge sharing to help the bank develop a green, social, and sustainable bonds and loans framework.
“Africa’s green transition requires considerable mobilisation of funds,” said Jason Quinn, Absa interim group chief executive. “The agreement with IFC bolsters our funding available for green projects and strengthens Absa’s position as a leader in financing renewable projects in South Africa,” he said.
Absa said it was the leader in arranging financing for South Africa’s Renewable Independent Power Producer Programme, having structured and arranged financing for about 46 percent of projects concluded under the programme to date.
Other banks are targeting climate change. Earlier this month, Nedbank came out with a target of zero emissions by 2050. Standard Bank is currently under fire from its shareholders for its lack of disclosure and measured targets around climate change.
“Financial institutions and the private sector have an important role to play helping South Africa to rebuild greener and more sustainably from the impact of Covid-19,” said Adamou Labara, the IFC’s country manager for South Africa. “By increasing funding for renewable energy and climate smart projects we can help South Africa strengthen its climate change resilience and increase climate change adaptation.”
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