AfDB, Standard Bank partner for R3.6bn SMME funding and trade growth

Source: prostooleh via Freepik

The deal involves a R3.6bn investment in a social bond and a $200m Risk Participation Agreement for Standard Bank of South Africa Limited. This partnership is aimed at increasing Standard Bank’s lending capacity, thereby improving access to finance for South Africa’s SMMEs—key players in driving economic growth and job creation in the country.

The agreement also has broader goals of expanding trade within South Africa and across the African continent.

Inclusive economic development

The social bond investment promotes inclusive economic development, particularly for SMMEs with a turnover below R300m and loan sizes under R40m. This financing will support up to 4,000 businesses, helping them scale operations, create jobs, and contribute to economic resilience.

Kenny Fihla, deputy chief executive officer of Standard Bank Group and Chief Executive Officer of SBSA, welcomed the investment, stating: "This landmark partnership strengthens our ability to support SMMEs, the backbone of South Africa’s economy. With approximately 3.2 million SMMEs accounting for 60% of jobs, ensuring access to finance is crucial. This initiative aligns with our Sustainable Finance Framework and our commitment to financial inclusion."

In addition to the social bond, the $200m RPA enhances trade finance across Africa, focusing on Low-Income Countries and Transition States. This agreement enables local banks to increase lending by sharing risk, bridging the trade finance gap and promoting intra-African trade.

Broader economic impact

Leila Mokaddem, director general for Southern Africa at the African Development Bank, highlighted the broader impact: "This collaboration marks a significant milestone in our long-standing partnership and is a testament to our shared commitment to supporting SMMEs’ growth and enhancing trade finance across Africa.

"Expanding financial inclusion and trade opportunities empowers businesses to drive economic transformation and regional integration. The Standard Bank Group remains a strategic partner in our shared vision for economic development on the continent."

This initiative aligns with the African Development Bank’s Ten-Year Strategy (2024–2033), which prioritises industrialisation, regional integration, and improving the quality of life in Africa. It also supports Standard Bank’s Sustainable Finance Framework, reinforcing both institutions’ commitment to fostering green and inclusive growth.

“We are proud of this transaction, demonstrating our commitment to sustainable financing. By supporting businesses, we create long-term economic opportunities and financial resilience,” stated Ahmed Attout, director of the financial sector development department at the African Development Bank.

Fihla reaffirmed the significance of the collaboration: "By providing much-needed capital, we are helping enterprises overcome challenges and thrive. This partnership illustrates the power of collaboration in driving meaningful economic and social change in Africa.”