$512 million World Bank Loan to Expand Finance for Bolstering Homes, Infrastructure Against Earthquakes, Flooding

WASHINGTON, September 27, 2022-The World Bank Board today approved $512.2 million in financing for Türkiye to expand access to housing and infrastructure that is resilient to climate and natural hazards, with the goal of saving lives and supporting the country’s economic development.

The financing is for the Climate and Disaster Resilient Cities Project. Of the total project amount, $338.5 million will go to the Government of Türkiye for developing new, affordable financing mechanisms to enable households to retrofit or reconstruct their housing to increase resilience to seismic and climate hazards, while $173.6 million will go to Iller Bankasi Anonim Sirketi (ILBANK), to provide financing to municipalities to build more resilient infrastructure.

More than 1 million people will benefit from upgraded infrastructure and 32,000 people will benefit from loans to reconstruct or retrofit their risky housing units. The project will focus on urban areas in the provinces of Istanbul, Izmir, Kahramanmaras, Manisa, and Tekirdag, which are highly vulnerable to seismic and climate hazards. These provinces also include Türkiye’s largest urban areas where 76% of the country’s 85 million people live and where much of the country’s economic activity is concentrated.

“Türkiye is singularly vulnerable to both natural and climate-related hazards, which exact a heavy toll on people and the country’s economy. With this project, the World Bank is pleased to make an important contribution to safeguard Türkiye’s development progress and underpin its transition to a resilient and climate-proof future,” said Carolina Sanchez-Paramo, World Bank’s Acting Country Director for Türkiye.

Sitting on multiple active fault lines, Türkiye is one of the most earthquake-prone countries in the world. Earthquakes have caused the greatest human and economic losses in the last 20 years, largely due to damage and collapse of buildings. Meanwhile, extreme weather events and flooding have increased in frequency and intensity. Last year alone, floods resulted in at least 81 deaths, about 2,500 evacuees, and significant damage to more than 450 buildings.

An estimated 6.7 million residential buildings across the country require seismic retrofitting or reconstruction. These structures were built prior to the introduction, in 2000, of modern construction codes for seismic resistance. Most fatalities from earthquakes are attributed to the structural failure of these older residential buildings.

Climate-proofing housing and infrastructure is also critical for Türkiye to sustain its economic growth while meeting its commitments for climate change and environmental sustainability. The building sector in Türkiye accounts for about 12% of the country’s greenhouse gas (GHG) emissions.

“Urban transformation against seismic and climate hazards will require significant investments at all levels of government and in the private sector, including households. This project addresses the key challenges of greater affordability of retrofitting or demolishing and reconstructing risk-prone housing and leveraging available resources and mobilizing finance for municipalities to increase investments in resilient infrastructure,” said Zoe Trohanis, one of the World Bank Project Team Leaders.

The project’s main components include:

  • Provision of technical assistance to the Ministry of Environment, Urbanization, and Climate Change (MoEUCC) and local authorities in selected provinces to strengthen their capacity to develop, implement, and monitor green and resilient urban transformation programs.
  • Expanding access to resilient housing by financing loans at affordable interest rates for eligible owners to retrofit or reconstruct their units in risky residential or mixed-use buildings to meet the new resilient building code and energy efficiency standards.
  • Investments in climate and disaster resilient municipal infrastructure will provide financing for ILBANK to lend to eligible utilities to undertake infrastructure investments that increase resilience; these loans will have longer maturities and lower interest rates than the comparable domestic market.
  • A contingent emergency provision will be included in the project to allow MoEUCC to reallocate the project’s funds in the event of a disaster and its immediate aftermath, to address urgent humanitarian and other needs.

The World Bank is an important and reliable partner for Türkiye in disaster risk management, urban development, and energy efficiency. Other World Bank projects implemented in recent years include the Seismic Resilience and Energy Efficiency in Public Buildings Project; Istanbul Seismic Risk Mitigation and Emergency Preparedness Project; the Safe Schools Project financed by the Facility for Refugees in Türkiye; the Disaster Risk Management in Schools Project; the Small and Medium Enterprises Energy Efficiency Project; and the Energy Efficiency in Public Buildings Project, among others.

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