Launched in 2006, IFC’s SA SME Banking Program worked with a variety of financial sector partners to create an environment where entrepreneurs and smaller businesses in South Africa can today more easily and quickly access finance and training.
The IFC program, funded by Switzerland’s State Secretariat for Economic Affairs (SECO), worked towards three key objectives to provide comprehensive support for thousands of smaller businesses, placing a special focus on increasing lending to businesses run by women and previously disadvantaged South Africans.
1. Improve credit reporting for smaller businesses so lenders can more easily and quickly approve loans. A lack of reliable credit information is a red light for lenders, and thwarts the ambitions of many smaller businesses.
2. Help banks and non-bank financial institutions increase their lending to smaller businesses. IFC provided lenders with the skills and technical support they needed to work more closely with SMEs.
3. Link banks and credit bureaus to business development service providers. These providers help smaller businesses develop business plans and offer other guidance they need to access finance, take on bigger contracts, and hire more employees.
The Results
Over its three-year cycle, the SA SME Program helped our financial partners greatly increase lending to smaller businesses -- everything from grocery shops and bakeries to construction firms. Smaller businesses like these often struggle to access loans and training, even in South Africa’s highly-developed economy.
The program strengthened partner banks and non-bank financial institutions, helping them upgrade IT systems, train loan officers, and better understand how to service the important SME sector.
IFC also helped businesses access skills training and develop credit histories, which help banks and other financial institutions make loan decisions. Knowledge gained from supporting financial institutions and smaller businesses in South Africa will be applied IFC programs in other parts of Africa and in emerging markets around the world.
Notable developmental results include:
- IFC’s partners made $192 million in loans to SMEs
- 11,300 more SMEs accessing finance
- Credit histories created for 13,000 businesses, many of these in the construction sector. Positive credit information helps banks and other lenders make faster loan decisions.
- Electronic cash card developed for SMEs in Cape Town. The card helps businesses
- New products for SME lending introduced by partner financial institutions, including rural finance, supply chain finance, trade/franchise finance and micro enterprise lending (via a pilot implemented by ABSA Bank).
IFC helped one of South Africa's largest banks, ABSA Bank, increase lending and support to thousands of small businesses historically shut out of mainstream finance.
Backed by IFC, ABSA's Micro Enterprise Finance Unit (AMEF) opened new branches in several townships across South Africa, bringing micro lending and world class banking services to places where they had never previously existed.
Stronger Financial Partners |
"IFC was an ideal partner for us because of their experience in working with SMEs. They gave us the advice and support we needed to develop our business and helped us upgrade our management information system."
George Watson, New Business Finance CEO.
Half of NBF’s clients are women and 98 percent are historically disadvantaged. NBF made loans of $12 million to nearly 1,300 SMEs while working with IFC.
"The relationship between IFC and Vengrow has been very positive. Without their assistance, we would still be in the starting blocks…IFC’s support gave us access to technology and training we would not have otherwise been able to access."
Veon Cupido, Vengrow CEO.
Vengrow made loans valued at $530,000 to 65 clients while working with IFC. The lender supports a growing number of small shop owners around Cape Town. |
For more information contact:
Jason Hopps
Communications Officer
Johannesburg, South Africa
Phone: +27 11 731 3120
E-mail: jhopps@ifc.org
