The partnership between the African Development Bank and FirstRand Bank showed their commitment to addressing the challenges faced by underserved business communities in South Africa.
The African Development Bank Group has announced that it will provide $310 million as financial support to FirstRand Bank, one of the top financial institutions in Africa.
The goal of this funding is to provide micro, small, and medium-sized enterprises (MSMEs) in South Africa, particularly those owned by women and those involved in agribusiness, with access to financial support.
FirstRand Group, which owns FirstRand Bank, will be responsible for managing and distributing the finance that is provided by the African Development Bank.
The financial package provided by the Bank shows their commitment to helping private sector companies to grow and shows a high level of trust in FNB, FirstRand’s commercial banking arm.
The aim of the partnership is to support South Africa’s growth and promote the growth of women entrepreneurs and agricultural businesses throughout the country.
The approved funding is divided into three targeted segments. The largest, a $200 million line of credit, will be channeled as loans to MSMEs operating in a wide range of sectors. A further $100 million has been specifically allocated to support MSMEs owned or led by women, which aims to narrow gender disparities in financial access. The remaining $10 million takes the form of a concessional line of credit sourced from the Agri-Food SME Catalytic Financing Mechanism, and is designated to help women-owned agricultural small businesses.
The financial aid shows that the African Development Bank is committed to supporting the private sector’s growth and ensuring that economic development benefits all people in South Africa.
The Bank is choosing to distribute funds through FirstRand Bank and its commercial banking arm, FNB, thereby relying on a trusted partner with a strong national reach.
This strategy aims to ensure that MSMEs, particularly those led by women, can easily access capital whenever needed to grow their businesses, create jobs, and contribute meaningfully to the country’s economic expansion.
A notable aspect of the funding is its pronounced gender orientation. A significant portion of the funding, which amounts to more than one-third, or $110 million, is set aside for MSMEs owned by women.
The intention behind a deliberate focus on women aligns with the African Development Bank’s programs to support women entrepreneurs through initiatives such as the African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) and the Agri-Food SME Catalytic Financing Mechanism (ACFM). The goal of these programs is to reduce the gender finance gap between men and women that still persists across the continent.
Part of the funding comes from concessional funding, which is structured in a way that women-owned companies in agriculture can access funding at affordable credit and favourable terms.
Many smallholder farmers, who contribute significantly to the country’s agricultural industry, often struggle to access loans from traditional banks. By focusing on this group, the project aims to have wider inclusion and help boost growth within the agricultural industry.
By supporting the operation through funding, the initiative also aims to provide technical support and performance-based incentives, which are backed by the CFM and AFAWA programs. They aim to make small businesses led by women more financially stable, improve FNB’s agricultural banking services, and explore innovative ways to quality credit checks.
The partnership between the African Development Bank and FirstRand Bank showed their commitment to promoting inclusive economic growth and addressing the challenges faced by underserved business communities in South Africa. By focusing on women entrepreneurs and smallholder farmers, the project aims to create jobs, develop the community, and improve the living standards of people in South Africa.
The project is closely aligned with the African Development Bank’s main development goals and its strategic plan for the next ten years from 2024 to 2033, which focuses on inclusive economic growth, private sector development, and gender equality.