IFC has provided financing to FirstRand Bank which will support SMEs in South Africa, including women-owned businesses. They will support SMEs in agriculture, services, trade, construction, hospitality, and other sectors in the country.
IFC’s $150 million loan will enable FirstRand Bank to increase lending to SMEs with loan sizes between $10,000 and $2 million equivalent in South African rand. This will help the businesses sustainably scale, expand into new markets, and sustain and create jobs. FirstRand will allocate 25% of the IFC’s loan to support women owned businesses.
Although South Africa has a developed financial system, smaller businesses in the country can still struggle to access financing, limiting their growth. IFC’s partnership with FirstRand Bank will help the bank increase its already wide-ranging support for South Africa’s smaller businesses and entrepreneurs.
“South African SMEs have been hard hit by events beyond their control over the past few years, such as the pandemic, and the floods in KwaZulu-Natal. SMEs were particularly affected as they do not have significant capital reserves and other buffers to weather stress events. This transaction will provide FirstRand Bank with valuable additional capacity to provide small businesses with innovative funding solutions to support growth,” Andries du Toit, FirstRand’s Group Treasurer.
“SMEs are key to job creation and the delivery of essential goods and services,” Adamou Labara, IFC’s Country Manager for South Africa. “IFC’s investment in FirstRand Bank, a longstanding partner, will support the resilience of SMEs in South Africa, helping them grow and become more sustainable, including through ongoing global economic challenges.”
IFC has an investment portfolio of about $3.1 billion across 45 clients in South Africa, and an active advisory portfolio of $25.8 million across 15 clients. IFC supports the private sector in South Africa through focus areas such as empowering small businesses and entrepreneurs, promoting financial inclusion, and contributing to the country’s transition towards a greener economy.
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets.