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Signature MoU FirstRand
AFD Group and FirstRand Limited’s wholly owned subsidiary FirstRand Bank (‘the bank”) have signed a Memorandum of Understanding covering the provision of a $100 million loan to help the South African bank finance climate change mitigation and adaptation projects. This project is part of AFD Group’s Transforming Financial Systems for Climate (TFSC) Programme, launched in partnership with the Green Climate Fund, to accelerate the local reorientation of investment flows towards low carbon emission development.

The bank’s parent FirstRand  Limited (“FirstRand”) is the largest financial services group in Africa by market capitalisation with a long track record  in climate finance in South Africa. The long-term partnership between AFD Group and FirstRand has been established through several projects dedicated to supporting key sectors and players operating in South Africa’s sustainable development programmes. For example, the most recent financing facilities provided by AFD Group’s private sector financing arm Proparco were aimed at supporting SMEs, as part of its Choose Africa initiative, and agriculture transformation.

The new US$100 million loan will assist the bank to scale up its financing for climate mitigation and adaptation projects, focusing on key sectors for South Africa’s sustainable development, including affordable housing, renewable energy, energy efficiency and agriculture. This operation will support South Africa’s ambitious Nationally Determined Contribution (non-binding national plans highlighting climate actions governments aim to contribute to achieve the global targets set out in the Paris Agreement) and contribute to reinforcing the South African private sector’s role in the transition to a low-carbon and resilient economy.

This loan will be AFD Group’s first operation in South Africa as part of its "Transforming Financial Systems for Climate" (TFSC) Programme. Launched in 2018 in partnership with the Green Climate Fund (GCF), this $750 million Programme is dedicated to supporting local financial institutions to scale up climate impact finance in 17 countries, primarily in Africa. It illustrates the common ambition of AFD Group and the GCF to accelerate the local reorientation of investment flows towards low-emission and climate-change resilient development.

This operation also benefits from technical assistance facilities aimed at facilitating the implementation of the Programme and enhancing  FirstRand’s capacity in the field of climate finance.

Commenting on the transaction, Proparco’s Deputy CEO Djalal Khimdjee said; “Proparco is very happy to accompany FirstRand’s willingness to scale up its climate change strategy in partnership with the Green Climate Fund. This new dimension in AFD Group’s 20+ years partnership with FirstRand will hopefully contribute to a “just” and inclusive climate transition of South Africa.”

Andries du Toit, FirstRand’s group treasurer added, “This loan facility and supporting technical assistance will enable us to expedite our strategy to broaden and deepen our client offerings in the SME and agriculture segments whilst simultaneously supporting our own and our clients’ climate change ambitions in an efficient and effective manner.”