Summary:
- Absa Group Ltd has expanded its agreement with the Multilateral Investment Guarantee Agency (MIGA), boosting financial capacity for Pan-African climate projects to approximately $1 billion. This builds on a 2019 partnership and reinforces Absa’s commitment to sustainable finance, including a pledge to eliminate coal project funding by 2030.
Absa Group Ltd, one of Africa’s largest diversified financial service providers, has solidified its commitment to climate finance by expanding its agreement with the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group. This new agreement enhances Absa’s financial capacity for investing in climate projects across Africa.
In a landmark move back in 2019, MIGA issued capital guarantees worth $497 million to Absa, aimed at mitigating risks in several African countries including Ghana, Kenya, Mauritius, Mozambique, Seychelles, Uganda, and Zambia. This made Absa the first African banking group to engage in such a transaction with MIGA, facilitating increased financing and growth in these markets.
On June 24, 2024, Absa and MIGA signed a new agreement to build on this initial success, boosting cash-reserve cover to approximately $1 billion across the participating markets.
“The expanded agreement builds on a market-leading transaction between Absa and MIGA. It strengthens our partnership and advances our common goal of financing climate projects across Africa that enhance economic activity as well as sustainability,” said Deon Raju, Absa Group Finance Director.
“MIGA is excited to expand our partnership with Absa to facilitate greater investment in climate projects across Africa,” added Hiroshi Matano, MIGA Executive Vice President. “The agreement underscores our commitment to supporting sustainable economic growth in the region during these turbulent global crises.”
Under this new agreement, Absa has committed to significantly increasing its climate finance activities in the covered markets. Notably, Absa has pledged not to fund any new coal projects with a tenor of three years or more and to completely eliminate coal exposure in these markets by 2030.
These commitments align with Absa’s strategic priority of being a proactive force for good, supporting a Just Transition in Africa, and reducing fossil fuel financing. The additional guarantees are anticipated to reduce Absa Group’s risk-weighted assets by approximately R11.5 billion, reflecting a lower risk profile and effectively securing additional capital resources.
Absa plans to utilize this enhanced capacity to drive climate finance initiatives over the duration of the guarantees, reinforcing its leadership in sustainable finance across the continent.
