Old Mutual invests in SME lending solutions business

Old Mutual, a listed financial services group, recently made a significant move by acquiring a minority stake in Preference Capital, an SME lending solutions business. Nobesuthu Ndlovu, Director of Old Mutual's SME division, discussed the importance and impact of this deal in an interview with CNBC Africa. Ndlovu emphasized the vital role that SMEs play in South Africa's economy, calling them the 'lifeblood' of the country and key contributors to economic activity. Recognizing the funding gap that exists for SMEs in South Africa, estimated at around 540 billion Rand, Old Mutual saw an opportunity to make a meaningful impact by partnering with Preference Capital. Preference Capital offers alternative lending products that take a unique approach to assessing businesses, moving away from traditional forms of collateral and balance sheet analysis. By looking at factors such as confirmed purchase orders and invoice history, they are able to provide funding to SMEs that may not have access to traditional forms of financing. Ndlovu highlighted the importance of addressing SME funding needs for Old Mutual, citing the significant role that SMEs play in job creation and social development in South Africa. By supporting the success and profitability of SMEs, Old Mutual aims to promote economic growth, reduce inequality, and drive poverty alleviation. When asked about the long-term impact of this partnership, Ndlovu expressed a personal commitment to seeing SMEs thrive and grow into sustainable and profitable entities. Success, in this context, would mean having more SMEs emerge as major players in various industries, mirroring the success of larger corporations in the market. Overall, Old Mutual's investment in Preference Capital signifies a strategic move towards addressing the funding challenges faced by SMEs in South Africa. By providing alternative lending solutions and support to small and medium businesses, the company aims to drive economic development and empower SMEs to achieve long-term success.