South African companies wanting to set up energy-efficient and water-smart projects are being given a boost through a US$225 million loan aimed at developing the country’s climate-finance market.
According to FirstRand Bank Ltd, it will use the IFC-backed loan to finance green projects for its South African corporate and SME clients. Group treasurer Andries du Toit says that by enabling the bank to increase its financial and advisory support, the loan will better assist clients to participate ‘in the growth of South Africa’s green economy’.
South African banks currently provide 45% of the financing for renewable-energy and energy-efficient projects in the country.
The loan includes US$75 million from the Dutch entrepreneurial development bank FMO. The IFC will also provide technical assistance such as impact monitoring, water-stress management and other sustainability solutions to clients looking to reduce their carbon footprints.
The investment supports the government’s ambition to shift to a lower carbon economy by reducing the country’s greenhouse gas emissions by 42% by 2025 and diversifying its electricity production away from coal by 2050.
