50650 - SLGP EC FirstRand Bank Limited

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Summary of Investment Information

Project Number

50650

Company Name

SLGP EC FirstRand Bank

Date SPI Disclosed

Mar 26, 2025

Country

South Africa

Region

Africa

Projected Board Date

Dec 6, 2024

Environmental Category

FI-2 - Limited

Status

Pending Disbursement

Last Updated Date

Nov 19, 2025

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Previous Events

Approved : Dec 13, 2024
Signed : Dec 20, 2024

Sector

Commercial Banking - SME Finance

Additional Project Attributes

Blended Finance

Project Description

The proposed project consists of an unfunded Risk Sharing Facility (RSF) to FirstRand Bank Limited (FRB or the Bank) where IFC will cover 50% of the credit risk of an up to US$100 million equivalent in South African Rand (ZAR) portfolio of eligible loans to small and medium enterprises (SMEs) in South Africa (the Project). The RSF will specifically support the Bank to finance woman-owned SMEs and SMEs involved with climate solutions, including climate smart agriculture; or healthcare activities.

The Project will be processed under the Small Loan Guarantee Program European Commission/Private Sector Window (SLGP EC/PSW or the Program), a programmatic approach to risk sharing which aims to enhance and strengthen the capacity of financial institutions for risk taking and financing of SMEs in eligible countries. The Project is also expected to be supported by the IFC-BMWK (Bundesministerium für Wirtschaft und Klimaschutz) Scale Up Climate Finance through Greening the Financial Sector (BMWK) Program as described in the Blended Finance section.

Associated Advisory Engagement

Advisory support is envisioned to support FRB by providing knowledge sharing and capacity building related to the Climate Bond Resilience Taxonomy (CBRT), including support on aligning the portfolio of eligible loans to the CBRT. Further advisory support is envisioned through knowledge sharing to and capacity building of the Bank’s Sustainable Agriculture team with the aim to strengthen the Bank’s CSA strategy.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	50.0
Loan
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Guarantee	Loans to SME Borrowers
Guarantee	Loans to Woman-Owned SMEs

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Stakeholder effects: The Project is expected to contribute to increased access to finance for women-owned SMEs and climate finance for SMEs in South Africa. Despite having a developed financial sector, SMEs in South Africa still experience challenges in accessing credit, mainly from insufficient collateral or guarantees required by the banks. By providing FRB with a long-term de-risking instrument, the Project is expected to contribute to bridging this gap and increase access to finance for SMEs, especially in these two underserved segments. Contribution to market creation: This Project is part of a program of interventions that IFC is pursuing with several financial institutions to expand their climate finance lending capacity in South Africa. Within this broader programmatic approach, this project particularly targets SMEs, which are looking for financing to mitigate climate risks and increase resilience of their business. This would include SMEs with climate-smart agriculture projects. Within climate finance, supporting climate smart agricultural practices is an important step towards driving transformation in South Africa's agriculture sector, which is particularly at risk of climate change (due to increased events of floods and droughts in recent years). Beyond climate finance, the Project also targets WSMEs which remains an underserved segment. This Project will further promote market replication, especially on adaptation and resilience finance for SMEs.

Financial Additionality Financing Structure: IFC's RSF under the SLGP, with the support of the European Commission, will provide FRB with a commercially viable RSF that is not readily available in the South African market. The RSF will allow the Bank to partially mitigate the challenges faced in terms of perceived and real risk of lending to SMEs, with IFC covering up to 50% of the credit risk of the defined portfolio. This will be the first RSF offered to the Bank by IFC and will encourage the Bank to focus on some priority sectors within the SME segment, such as climate, climate-smart agriculture and women-owned businesses. Non-Financial Additionality Knowledge, Innovation and Capacity Building: IFC plans to support FRB by providing knowledge sharing of the CBRT and capacity building to align the portfolio of eligible loans to the CBRT. Further advisory support is envisioned through knowledge sharing to and capacity building of the Bank’s sustainable agriculture team to strengthen the Bank’s CSA strategy. These interventions will support the Bank's long-term design of financial services and products that credibly enhance climate adaptation and resilience.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
Value of Outstanding Loans, SMEs	USDMill	To be tracked yearly after commitment.	Not Available	Not Available	Not Available
Value of Outstanding Loans, SMEs	USDMill		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The Project will support the Bank's lending program to qualifying small and medium enterprises (SMEs), including women-owned businesses and SMEs involved in climate and health activities. The overall E&S risk of activities to be supported by IFC are considered to have medium adverse E&S risks and impacts that are few in number, generally site-specific, largely reversible and which can be readily addressed through mitigation measures. Therefore, the Project has been categorized as FI-2 in accordance with IFC's Sustainability Policy. The key risks and impacts of the Project derive from the Bank's capacity to maintain its management system to identify and manage the potential E&S risks associated with the sub-projects supported under this transaction. These risks are typically associated with labor and working conditions, occupational health and safety issues, waste management, and community health and safety, among others. The Project will not support coal-related, higher risk Agri activities or higher risk business activities that way include a) involuntary resettlement; b) risk of adverse impacts on indigenous peoples; c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; or d) significant occupational health and safety risks. For this investment, the Bank will be required to screen the eligible projects against the IFC Exclusion List and national E&S laws in South Africa. In relation to Performance Standard 2, FirstRand's labor and working conditions are largely in line with the requirements of this Performance Standard and IFC's Life and Fire Safety Standards for financial intermediaries.

FRB is an existing client and has implemented an E&S management system and procedures to screen sub- projects. The Bank's E&S risk management process includes E&S screenings and assessments applicable on the client and on the transaction level. E&S risk assessments also entail E&S risk-based categorization, E&S assessment against applicable local laws, and where applicable, the IFC Performance Standards. The Bank has designated staff with E&S responsibilities. Where applicable, identified mitigation measures as well as E&S risk management covenants are included in the legal agreements. Monitoring is conducted post-disbursement to ensure that all appropriate E&S risk management covenants or conditions included in the loan documentation have been fulfilled and remain current.

Contacts

For Inquiries About the Project, Contact

FirstRand Bank Limited
Bhulesh Singh
FirstRand Group Treasurer

debt.officer@firstrand.co.za
4 Merchant Place, Corner Fredman and Rivonia Road, Sandton, 2196 South Africa
www.firstrand.co.za

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