The African Development Bank Group and Standard Bank Group have set up a R7.3 billion facility to drive the growth of small, medium and micro enterprises across the continent.
An agreement signed by the two institutions in Johannesburg includes investment in a R3.6 billion social bond targeted at SMMEs with turnover below R300 million and a $200 million Risk Participation Agreement under Standard Bank’s South African unit. Loan sizes will be capped at less than R40 million.
“This financing will support up to 4,000 businesses, helping them scale operations, create jobs, and contribute to economic resilience,’’ Kenny Fihla, Standard Bank Group Deputy Chief Executive Officer said. “With approximately 3.2 million SMMEs accounting for 60% of jobs, ensuring access to finance is crucial.”
South Africa’s economic growth has averaged around 1% in the past decade with access to finance for the small scale sector cited among the main reasons for the lacklustre growth. The government wants to boost growth to three percent by next year as it implements a slew of reforms including improving the ease of doing business in the country.
The African Development Bank said the agreement will help increase lending by sharing risk while bridging the trade finance gap and promoting intra-African trade, which remains among the lowest in the world below 20%.
‘’This collaboration marks a significant milestone in our long-standing partnership and is a testament to our shared commitment to supporting SMMEs’ growth and enhancing trade finance across Africa,’’ Leila Mokaddem, Director General for Southern Africa at the African Development Bank said in a statement. “Expanding financial inclusion and trade opportunities empowers businesses to drive economic transformation and regional integration.’’
She said the agreement aligns with the African Development Bank’s Ten-Year Strategy which prioritises industrialisation, regional integration, and improving the quality of life in Africa. It also supports Standard Bank’s Sustainable Finance Framework.
