Press Releases

IFC Supports Black Economic Empowerment in South African Financial Sector

In Washington:
Georg Schmidt

Phone: +1 (202) 458-2934

Fax:      +1 (202) 974-4384


WASHINGTON, D.C., March 7, 2005 – The International Finance Corporation, the private sector arm of the World Bank Group, today committed SA Rand 173 million, the equivalent of $30 million, in mezzanine loan financing to support the black economic empowerment initiatives of FirstRand Limited, one of South Africa’s leading financial groups. The transaction is the largest of this kind in South Africa to date.  

Under the terms of the agreement, FirstRand Empowerment Trust will purchase 363.8 million ordinary shares of FirstRand Limited and hold them for the benefit of four broad-based black economic empowerment groups: Kagiso Trust, Mineworkers Investment Trust, FirstRand Empowerment Foundation, and WDB Trust.  FirstRand Empowerment Trust will hold 6.5 percent of FirstRand’s shares outstanding. Along with 3.5 percent of shares to be sold to black employees through various employee trusts, First Rand will increase the portion of outstanding shares transferred to black people to 10 percent, or the equivalent of $1.4 billion.

For FirstRand the project marks a significant step towards meeting the black empowerment requirements of South Africa’s new Financial Sector Charter, which has been voluntarily developed by the country’s financial industry.  In line with the Charter, FirstRand is taking additional measures to address social and economic inequalities, including skills development and training for black professionals and managers, senior appointments, access to financial services, procurement, and sourcing from black-owned ventures.  

Richard Ranken, IFC’s director for Africa, said, “We expect this transaction to have a high developmental impact as it will help one of South Africa’s largest financial services groups better include previously disadvantaged groups in its ownership and operations.  Through this transaction IFC continues to support South Africa’s black economic empowerment initiatives across different industries including the mining sector, where we provided $28 million to Mvelaphanda Resources for a similar project in 2004.”

“The funding of FirstRand Empowerment Trust represents a concerted effort between FirstRand, IFC, various bilateral developmental institutions, and commercial investors in support of black ownership and meaningful black participation in FirstRand’s operations.  We are very pleased with the level of support and the degree of professionalism shown by the participants in this transaction,” noted Laurie Dippenaar, CEO of FirstRand Limited.  

Jyrki Koskelo, IFC’s director for financial markets, added, “IFC views FirstRand as a strong partner in South Africa.  The company is in the vanguard of black economic empowerment and an important player in the country’s financial market. We look forward to strengthening our relationship with FirstRand in the years to come.”

Headquartered in Johannesburg, FirstRand is among the four largest financial groups in South Africa.  It has a diversified holding across the financial markets spectrum, including corporate and retail banking, merchant banking, brokerage, and insurance.  The group’s current capitalization is about $13 billion.  As of June 2004, the value of assets and equity amounted to $67.7 billion and $3.8 billion respectively.  Operating results showed a strong growth of all major business lines, including banking, insurance, asset and property management.  

The mission of IFC ( is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.