The African Development Bank (AfDB) has announced that its board of directors has authorised a financial package for South Africa’s FirstRand Bank that had a total value of $310-million. The package is aimed at increasing the South African institution’s ability to finance micro, small and medium-sized enterprises (MSMEs). Over a third of the package is allocated to the support of women-owned MSMEs. Another focus area is agribusinesses.

(FirstRand is a wholly-owned subsidiary of the JSE-listed FirstRand Group. The group’s leading commercial banking operation is FNB (First National Bank).)

“This approval highlights the [AfDB’s] dedication to bolstering the private sector and fostering inclusive economic growth in South Africa,” highlighted AfDB Southern Africa director-general Kennedy Mbekeani. “By channelling these resources through FirstRand and, in particular, its commercial banking franchise, FNB, we are working with trusted partners with extensive reach to ensure that MSMEs – particularly those led by women – have access to the capital they need to grow, create jobs, and contribute to South Africa’s economic development.”

Of the total package, $200-million is in the form of a line of credit to be provided to MSMEs in various sectors of the economy; $100-million is to be dedicated to women-led and women-owned MSMEs; and $10-million is a concessional credit line from the AfDB’s Agri-Food SME Catalytic Financing Mechanism (ACFM), and aimed at women-owned small agricultural enterprises. The allocation of finance specifically for women-owned and -led enterprises is in line with the AfDB’s Affirmative Finance Action for Women in Africa (AFAWA) initiative. 

“MSMEs are significant contributors to South Africa’s economic growth, supporting job creation and community upliftment,” pointed out FirstRand Group Treasurer Bhulesh Singh. “FirstRand’s commercial banking arm, FNB, has demonstrated a strong track record in providing capacity to women-owned businesses and small businesses in the agricultural sector, which in turn supports community development.”

The AfDB, through its AFAWA and ACFM initiatives, will also supply performance-based incentives and technical assistance. These technical assistance packages are aimed at improving the bankability of women-led and/or -owned enterprises, supporting FNB’s offerings in the agriculture sector, and examining alternative credit scoring.

“The approval of this financing package represents a significant milestone and elevation of this impactful partnership between the [AfDB] and FirstRand,” stressed AfDB Financial Sector Development Department director Ahmed Attout. “It demonstrates both institutions’ shared commitment to driving inclusive economic growth and empowerment of the heavily credit-deprived business communities of South Africa by deliberately channelling credit to women entrepreneurs and smallholder farmers.”