Finance: IFC Invests in African Bank to Boost Education and Housing
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IFC, a member of the World Bank Group, announced today that it has invested 350 million South Africa Rand (about $36 million) in African Bank Limited to increase loans for education and housing, two important sectors for South Africa’s sustainable, long-term economic growth.
IFC’s loan will qualify as Tier II capital, strengthening African Bank’s balance sheet and capital base. The bank will use the funds to increase lending to low and middle income clients who face significant challenges accessing financial services, and to offer new loan products for home improvement and education. More than half of the bank’s current loan disbursements are used for education and housing.
“African Bank has over the years put in place a strong risk-management structure and culture that has enabled it to succeed in a market segment that many perceive to be high risk,” said Dave Woollam, African Bank’s CEO. “Working with IFC will enable African Bank to increase financing and optimize our cost of capital, helping bring down credit costs for our clients and improving our product range to better support two important segments of South Africa’s economy.”
The rand-denominated loan is structured using the swap market. By utilizing swaps, IFC will be increasing the liquidity and depth of the swap market, providing financing that mitigates the foreign exchange risk of South African companies, and supporting capital market development.
“Improving access to finance is an important part of IFC’s strategy to strengthen the private sector in Sub-Saharan Africa,” said Saleem Karimjee, IFC Country Manager for Southern Africa. “IFC is committed to supporting strong financial institutions that continue to bring financial services to more people and places amid the recent turmoil in global markets.”
Business News Sector Tags: Finance|