German development bank KfW and the Industrial Development Corporation of South Africa (IDC) on Thursday signed a “milestone agreement” for an $80-million loan facility.
KfW executive board member Dr Stefan Peiß and newly appointed IDC CEO TP Nchocho were in attendance to sign the document on behalf of their respective organisations.
The loan facility, called the South African facility for Green Growth (SAFGG), is earmarked for local entities to invest in green economy projects that will have a beneficial impact on environment protection and resource efficiency with regard to water resource protection and conservation.
The facility will also enable local entities to access funding to invest in the green economy, the result of which will be to help mitigate the impact of carbon dioxide emissions.
Speaking at its yearly reception in Pretoria, Peiß commended the IDC for its role in providing funding to small and medium-sized companies that were harnessing opportunities in the green economy.
He argued that while the financial needs of large commercial enterprises were generally well catered for by the private sector, the smaller entrepreneurs in the green economy experienced many challenges.
Some of these challenges range from difficulties in accessing markets, poor infrastructure, and little or no physical assets that could be used as collateral for accessing financing.
Nchocho agreed, highlighting that the loan facility from KfW would “significantly boost the IDC’s objectives of increasing its investment in renewable energy initiatives and infrastructure related projects”.
He further expressed his gratitude to the KfW, adding that the relationship demonstrated the level of confidence that the KfW has in the IDC.
“Most importantly, KfW’s support has largely helped us to meet our developmental mandate especially regarding supporting the growth of local [small and medium-sized enterprises] in various sectors of the economy, including agriculture, light manufacturing and tourism,” Nchocho said.
Nchocho said the IDC would use this facility to help tackle the country’s infrastructure backlog.