The International Finance Corporation (IFC) has granted a $200 million loan to FirstRand as part of a program to expand lending and support for small and medium-sized enterprises (SMEs) in South Africa through the formal banking sector.
IFC believes large banks in South Africa can play a critical role in expanding SMEs by increasing their focus on the sector’s needs and improving their products and services for this segment.
Its SME Push Program in South Africa aims at expanding lending to SMEs and to spur job creation by creating partnerships with the country’s largest banks to increase their lending to unserved and underserved segments of the SME market, the largest source of employment in South Africa.
The Program plans to inject $2-3 billion into South African SMEs over the next 5-7 years through the country through investments, risk-sharing facilities and advisory services.
FirstRand is one of the largest financial institutions in South Africa. It provides banking, insurance and investment products and services to retail, commercial, corporate and public sector customers in South Africa and other key Southern, West and East African territories.
The $200 million will be channelled through FirstRand’s retail and commercial franchise, First National Bank (FNB), a leading player in the country’s SME segment that has a strong SME banking model and team.
Noting the IFC partnership as aligned with its continued support of the sector’s development, Andries du Toit, FirstRand Group Treasurer added, “FirstRand is committed to SME financing, as we recognise the key contributions smaller businesses make to economic growth and job creation in the country.”
IFC advisory services will work with FNB to develop new tools to improve risk assessment of SMEs and build their capacity with financial literacy training.
“IFC is committed to promoting the growth of SMEs to spur job creation at a time of economic uncertainty in South Africa, and globally,” said Oumar Seydi, IFC Director for East and Southern Africa.