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Equity prohibits loans for coal projects after IFC’s entry

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Equity prohibits loans for coal projects after IFC’s entry


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Equity Bank branch on Muindi Mbingu Street in Nairobi on Thursday, April 1, 2021. PHOTO | DENNIS ONSONGO | NMG

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Summary

  • Equity Group has committed not to lend to any coal-related projects, with the policy prompted by the International Finance Corporation (IFC), which has just acquired a 6.71 percent stake in the country’s largest bank.
  • Equity’s new anti-coal policy comes as the country prepares to exploit the raw material, with large quantities discovered in Kitui County’s Mui basin.

Equity Group #ticker: EQTY has pledged not to lend to any coal-related projects, with the policy prompted by the International Finance Corporation (IFC), which has just acquired a 6.71 percent stake in the country’s largest bank.

The international financier is using his capital to fund environmentally friendly ventures and block the financing of polluting industries in an effort to counteract climate change.

Equity’s new anti-coal policy comes as the country prepares to exploit the raw material, with large quantities discovered in Kitui County’s Mui basin.

“Through this equity investment, Equity Group commits to zero lending for coal-related projects such as the development or expansion of coal-fired power plants, coal mines, transportation assets used exclusively for coal,” IFC and Equity said in a joint statement.

The bank will also refrain from financing any utilities that generate more than 20 percent of the energy or revenue from coal, or have an annual coal production of 10 million tons or more, or have an installed coal-fired capacity of 5,000 megawatts or more.

Combustion of coal is estimated to account for almost half of carbon dioxide emissions and 72 percent of greenhouse gas emissions from the electricity sector worldwide.

Bamburi Cement #ticker: BAMB is among the largest producers using coal for fuel production.

Equity joins other African banks that have developed anti-coal policies at the request of shareholders and investors, a trend that started in the developed economies.

The Standard Bank of South Africa previously adopted a policy that made it more selective in the coal projects it can finance, with a focus on limiting emissions.

Kenya’s proposed 1,050 MW coal-fired power plant in Lamu collapsed after critical partners, including financial institutions and General Electric, withdrew their support.

IFC acquired its stake in Britam #ticker: BRIT and has tightened its commercial ties with the bank by mobilizing major loans to be re-lent through its subsidiaries in the region.

The global financier and its partners announced on Tuesday that they have signed an agreement to lend a total of $ 165 million (19.1 billion Sh) to the bank.

IFC will provide $ 50 million, while the British fund British International Investment will provide $ 65 million. An additional $ 65 million will come from Symbiotic, Responsibility and FMO.

The new loans bring the total credit from the IFC to $ 300 million (Sh34.7 billion).

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