AfDB, Standard Bank Back Women-Led SMEs in South Africa

African Development Bank (AfDB) and the Standard Bank Group have entered into a financing agreement of $332 million (ZAR 5.4 billion) with the purpose of increasing access to credit facilities to SMEs in South Africa with the special emphasis on women-owned SMEs as both parties strive to promote entrepreneurship, employment opportunities and inclusive economic growth.

The funding, which has been announced this week, was provided by a capital market security issuance by the Standard Bank Group which is the largest financial institution in Africa in terms of assets. It is designed as Financial Loss Absorbing Capacity (FLAC) facility and it is the first social FLAC facility to be listed on JSE.

As per the agreement, the total ZAR 5.4 billion will be used by the Standard Bank for extending loans to SMEs in South Africa, which is considered to be one of the most important engines of economic activities in the economy of the country.

Key Highlights:

• AfDB and Standard Bank have formed a $332 million fund that targets SMEs in South Africa, with an emphasis on women-owned enterprises.
• The establishment of a $1 million grant seeks to facilitate better access to funding and technology among women entrepreneurs.
• This is geared towards job creation, entrepreneurship, and inclusive growth.

Apart from the financial support, the technical assistance grant worth $1 million will be provided by the AFAWA program of the AfDB through the We-Fi program. The purpose of this financial aid is to facilitate access to finance among women-owned enterprises by using digital payments, credit histories, and enterprise/supplier development services.

Kennedy Mbekeani, who serves as AfDB’s Director General for Southern Africa and Country Manager for South Africa, noted that this arrangement is in line with the vision of the Bank, in enhancing the financial sector in Africa and channeling the much-needed long-term capital to the SMEs and entrepreneurs driving economic development.

According to Standard Bank, there are roughly 3.2 million SMEs operating in South Africa that contribute immensely to job creation and the economic output of the country. According to the bank, the provision of finance to small businesses is key to facilitating growth and expansion.

The arrangement comes after an 18-year-long collaboration between AfDB and Standard Bank, which dates back to 2008. It is worth noting that this arrangement comes at the heels of a ZAR 3.6 billion subordinated debt facility and a $200 million risk participation arrangement signed in 2024.

This new funding is anticipated to increase the lending power of Standard Bank in relation to SMEs in addition to helping out companies that belong to industries such as agriculture, manufacturing, wholesale, and retail trade. It is also hoped that this deal will inspire a greater adherence to international banking standards in addition to increasing access to sustainable financing.

Small and medium-sized enterprises form the vast majority of companies in South Africa and are very important in job creation. Many SMEs have been struggling to get funding and, in particular, women-run enterprises and those without any credit history.

The African Development Bank has ensured that the development of SMEs and empowerment of women in economic affairs have been identified as some of the major pillars in their private sector strategy in Africa. Through their initiative AFAWA, the Bank intends to minimize the financing gap faced by women entrepreneurs through a combination of lending and capacity building efforts. The recently signed agreement with Standard Bank will contribute to the overall economic development of South Africa.