Nedbank gets US$200m loan from IFC to drive renewables in South Africa

SOUTH AFRICAFinancial services group Nedbank has received a US$200 million loan from the International Finance Corporation (IFC), a member of the World Bank, to drive renewable energy projects in South Africa.

Arvana Singh, head of sustainable finance solutions at Nedbank’s Corporate Investment Banking (CIB), said the US$200 million loan facility will complement Nedbank’s already well-established green finance operations, grow its climate portfolio, and expand its support of renewable energy projects that are key to the continued evolution of South Africa’s green economy.

The announcement comes a week after the country’s mineral resources and energy ministry , finally announced the much-awaited opening of Bid Window 5 of the Renewable Energy Independent Power Producers Procurement Programme, which will procure a further 2,600MW of renewable energy from independent power producers.

According to the minister Gwede Mantashe, this will inject a total private sector investment amount of US$3 billion into the South African economy.

“This partnership between Nedbank CIB and the IFC is more than just a loan facility,” Singh said.

“It represents an endorsement, by a member of the World Bank Group, of Nedbank’s proven leadership in the funding of renewable energy projects that are helping the country transition to cleaner power, reduce its greenhouse gas emissions, create jobs in the renewables sector and contribute meaningfully to the achievement of the Sustainable Development Goals,” he noted.

In July 2020, Nedbank unveiled a US$133.8 million tier two capital instrument on the Johannesburg Stock Exchange (JSE) to support renewable energy investments in the country.

In a statement, the bank said this instrument, which was the first of its kind in South Africa, is listed on the Green Bonds segment of the JSE.

The launch of this sustainable capital instrument was designed and created in partnership with the African Development Bank.

“The SA government has a stated target of reducing the country’s greenhouse gas emissions by 42% by 2025, an achievement that requires a step-change in energy production from fossil-fuel dependency to large-scale reliance on renewable resources”

Amith Singh – Head of Enery Finance, Nedbank

On the IFC loan, Singh says the loan agreement aligns with the shared commitment of the IFC and Nedbank to contribute to the development of a robust and sustainable climate finance market in South Africa that, in turn, will underpin national government’s strategic objective of moving the country to a lower carbon economy.

“The South African government has a stated target of reducing the country’s greenhouse gas emissions by 42% by 2025, an achievement that requires a step change in energy production from fossil-fuel dependency to large-scale reliance on renewable resources,” said Amith Singh, head of energy finance at Nedbank.

“This transition, within tight time constraints, demands access to innovative funding mechanisms such as the IFC loan.”

Amith Singh also highlighted that the US$200 million loan affords Nedbank to add much more value to the renewables sector and the country’s sustainable development efforts in general.

“At Nedbank CIB, we see our role in terms of South Africa’s sustainable development journey as money experts who do good,” added Arvana Singh.

“We also believe that we have significant value to offer in terms of our reach and influence as a financial institution, our experience in renewables and other sustainable projects, and our proven commitment to partnering with all stakeholders in the country’s green economy to unlock shared value and benefits.”

She added that investment capital unlocked by the IFC partnership means Nedbank CIB has the opportunity and means to expand its reach as a sustainable development champion, enabling the much-needed rollout of renewable energy projects at scale in the coming years but, most importantly, doing so in a way that also delivers a lasting positive social and environmental impact.

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