IFC Support to South African Financial Institutions Will Help 500 Small and Medium Enterprises Secure Financing

IFC, a member of the World Bank Group, has launched the South Africa SME Banking Program to help local financial institutions develop the capacity to identify and meet the needs of the country’s small and medium enterprises. The program is expected to help some 500 local small and medium entrepreneurs gain access to financing through new, customized products that will be offered by local financial institutions.

The program was announced today at a knowledge-sharing event for South African financial institutions held at the Hilton Sandton Hotel. The event focused on the role of regulation in influencing the demand and supply of SME financial products. It attracted over 50 representatives, mainly from the financial sector, and featured presentations by regulatory experts from IFC, China, and Indonesia.

“With this program, our aim is to demonstrate the viability of the small and medium enterprise segment, and to encourage more financial institutions to reach out to this market,” said Bernard Chidzero, General Manager, IFC Private Enterprise Partnership for Africa.

According to Chidzero, the South Africa SME Banking program – a three-year advisory services program – will help support and accelerate lending to small and medium enterprises in the country.

SMEs make up the largest share of employment in South Africa and many other developing countries, and are often the foundation of the private sector. The entrepreneurs behind them could—and should—play a larger role in development, but are held back too often by limited access to financing from local, formal sector financial institutions.

Under the program, IFC will work with financial institutions, credit reporting companies, and local business service providers, with a focus on three areas:

Improving the national credit reporting infrastructure to provide lenders with the information they need to assess credit risk for smaller businesses

Supporting individual banks and nonbank financial institutions to expand financial services to small and medium enterprises, particularly black-owned and women-owned businesses

Linking banks and credit bureaus to business development service providers to enable them to develop specialized programs and products that target small and medium businesses.