The International Finance Corporation (IFC), a member of the World Bank Group, and Nedbank have partnered to increase financing for renewable energy projects in South Africa in an effort to help the country transition to cleaner forms of power, reduce greenhouse-gas (GHG) emissions and create jobs in the renewable energy sector.

Being the third investment dedicated to green finance in South Africa’s financial sector, the IFC will provide Nedbank with a loan of up to $200-million to help it expand its green finance operations and grow its climate portfolio by funding renewable energy projects.

The partnership is part of the IFC’s broader objective to develop South Africa’s climate finance market and to support the government of South Africa’s plan to shift to a lower-carbon economy.

South Africa has set the goals of reducing GHG emissions by 42% by 2025 and diversify its electricity production to reduce its reliance on coal-fired power by 2050.

Nedbank claims to be “Africa’s first carbon-neutral bank” and in 2019 became South Africa’s first commercial bank to launch a green bond on the JSE.

Nedbank sustainable financial solutions head Arvana Singh says the IFC transaction continues to demonstrate Nedbank’s commitment to engage in alternative climate finance mechanisms.

“These will further develop markets and support projects which create positive impacts aligned to the United Nations Sustainable Development Goals, in pursuit of Nedbank’s commitment to building a greener and cleaner economy.”

IFC South Africa country manager Adamou Labara says that while the immediate future calls for solutions to the economic damage caused by Covid-19, it is critical that the IFC takes this opportunity to re-think the structure of its economies, to build a fairer, more resilient, low-carbon future.

“Working with our partners to develop a strong climate finance market is an important part of this process.”

The IFC estimates South Africa’s climate-smart investment potential across renewable energy and urban infrastructure, including rail transport, electric vehicles and green buildings, amounts to $588-billion through to 2030.

Further, the IFC points out that the government plans to more than double the country’s power capacity by 2030, with renewables making up as much as 20% of the energy mix.