The French Development Agency (AFD) signed a subsidized loan agreement on Wednesday with top South African bank, Nedbank, for $50.1 million (€40 million) to provide housing loans for low-income households.

Nedbank said that some fees for the loan will be subsidized and interest rates will be fixed. The loan will provide enough financing for more than 4,000 low income households in South Africa.

“It has been agreed that 15 percent of the subsidy will be utilized for borrowers’ mentorship program, whilst the balance of the subsidy will be used to grant assistance to households,” said Brian Kennedy, MD of Nedbank Capital in a statement.

“AFD’s involvement in South Africa has existed since 1994 … should this market-first solution prove successful, the AFD will consider further investments,” noted Vincent Rousset, Regional representative of AFD in a statement.

The funds will be provided to Nedbank over the next 12 years at a fixed interest rate, which was not given. The loans are expected to be made available within the next 6 months.

(1 USD = 0.799 EUR)