In South Africa, Proparco and FirstRand strengthen their collaboration in favour of climate finance
published on 17 November 2022
Proparco, on behalf of AFD Group, has provided a $100 million climate finance-dedicated credit facility to FirstRand Bank Limited (FRB). This new transaction between the AFD Group and FirstRand Bank comes less than a year after the signing of a Memorandum of Understanding during COP26 between the two parties, agreeing to join forces to support the scaling of climate financing in South Africa, and in support of climate change adaptation and mitigation.
This transaction builds on a long-standing partnership between AFD Group and the FirstRand group, established through several projects aimed at supporting players operating in key sustainable development sectors in South Africa.
This transaction also marks the launch of AFD Group’s Transforming Financial Systems for Climate (TFSC) Programme in South Africa, in partnership with the Green Climate Fund (GCF) and French State. TFSC is a global programme worth $650 million, covering 17 countries. Within a South African context and in line with AFD Group’s broader objectives, TFSC aims to support South Africa’s pathway to a low-carbon economy and climate resilient society. South Africa has set an ambitious goal of reducing carbon emissions by 42% by 2025 and diversifying its electricity production away from coal by 2050.
The TFSC Programme will see investment in key development areas such as affordable housing, renewable energy, low carbon and efficient energy generation, climate-smart agriculture and water smart infrastructure. Supporting financial institutions in South Africa to expand access to financing in these areas remains critical in supporting South Africa’s just transition, in light of poverty, inequality and unemployment challenges, which have been exacerbated by the impacts of the Covid-19 pandemic.
The funds will be used to finance climate-related projects in South Africa. These projects will support both mitigation and adaptation, including green affordable housing and water-smart infrastructure. Proparco’s $100 million credit facility is also accompanied by a grant-funded technical advisory package.
“Proparco is proud to partner with FirstRand on this pioneering climate finance transaction under the TFSC Programme in South Africa. Such a transaction is fully aligned with Proparco and AFD Group’s Climate strategy, and embodies our commitment to support South Africa’s ambition for a more inclusive, resilient and just energy transition, and in line with Paris Agreement commitments. This project is also complementary to the work AFD has been doing for the past 10 years in favour of climate with the South African financial systems” said Françoise Lombard, CEO of Proparco.
Andries du Toit, FirstRand’s Group Treasurer, said, “This credit facility and supporting technical assistance will enable the group to broaden and deepen its climate-related product offerings across multiple client segments whilst simultaneously supporting clients achieve their own climate change ambitions.”
The project will contribute to SDG 7 (Affordable and Clean Energy), SDG 8 (Decent work and economic growth), SDG 10 (Gender equality) and SDG 13 (Climate action).
