AfDB Approves $310M to Boost MSMEs and Women Entrepreneurs in South Africa

FirstRand Bank, a wholly owned subsidiary of the FirstRand Group, will channel the funds through its commercial banking arm FNB, leveraging its broad national reach and strong SME portfolio.

The African Development Bank Group (AfDB) has approved a $310 million financing package for FirstRand Bank, one of Africa’s largest financial institutions and the parent company of FNB, South Africa’s leading commercial banking franchise. The historic package is designed to significantly expand access to finance for micro, small, and medium-sized enterprises (MSMEs) across South Africa, with a strong focus on women-led businesses, women-owned agribusinesses, and underserved smallholder farmers.

The package marks a major step forward in the Bank’s efforts to unlock private-sector growth, support job creation, and drive inclusive economic transformation in South Africa — a country where MSMEs employ millions yet continue to face widespread barriers to financing.

A Strategic Partnership to Transform MSME Access to Finance

FirstRand Bank, a wholly owned subsidiary of the FirstRand Group, will channel the funds through its commercial banking arm FNB, leveraging its broad national reach and strong SME portfolio.

The AfDB’s support includes three key components:

1. $200 million Line of Credit For on-lending to MSMEs across all major economic sectors — from retail and services to manufacturing, transport, and green enterprises.

2. $100 million Gender-Focused Line of Credit Targeting women-led and women-owned MSMEs, addressing the persistent financing gap that limits the growth potential of South Africa’s female entrepreneurs.

3. $10 million Concessional Line of Credit Provided through the Agri-Food SME Catalytic Financing Mechanism (ACFM) Specifically ring-fenced for women-owned agribusinesses and women-led smallholder farming operations.

This structure makes the package one of the most gender-responsive financing solutions ever approved by the Bank for South Africa.

Prioritizing Women Entrepreneurs: A Cornerstone of the Package

More than one-third of the total financing — $110 million — is dedicated to women. This aligns squarely with the AfDB’s flagship initiative AFAWA (Affirmative Finance Action for Women in Africa), which aims to mobilize $5 billion in financing for women-led businesses across the continent.

Most women-owned businesses in South Africa remain financially excluded due to limited collateral, restrictive credit assessments, and systemic inequality. Women farmers, in particular, have historically struggled to access formal credit despite being essential contributors to rural food production.

The concessional element of the package makes it possible for FNB to offer more favorable interest rates and flexible repayment terms to women-owned agricultural SMEs, creating pathways for growth in a sector central to rural livelihoods and national food security.

Complementary Support: Technical Assistance and Performance Incentives

Beyond financing, the AfDB will provide:

• Technical assistance to enhance the bankability of women-owned MSMEs

• Support for strengthening FNB’s agricultural finance offering

• Exploration of alternative and inclusive credit scoring mechanisms

• Performance-Based Incentives (PBIs) under AFAWA and ACFM, designed to reward FNB for reaching underserved market segments

These measures aim to build long-term institutional capacity, improve credit risk assessment methods, and ensure financial institutions can sustainably serve MSMEs beyond the life of the loan.

Leaders Welcome the Agreement

AfDB and FirstRand executives hailed the approval as a milestone for inclusive development.

Kennedy Mbekeani, AfDB Director General for Southern Africa, emphasized the Bank’s commitment to private-sector-led growth:

“By channeling resources through FirstRand and especially FNB, we’re partnering with a trusted institution to ensure MSMEs — particularly women entrepreneurs — access the capital they need to grow, create jobs, and support national development.”

Ahmed Attout, Director of the AfDB’s Financial Sector Development Department, noted the package’s groundbreaking focus:

“This financing highlights our commitment to empowering credit-deprived communities. It advances shared goals of fostering inclusive growth and supporting women-owned businesses and smallholder farmers.”

Bhulesh Singh, FirstRand Group Treasurer, stressed the national impact:

“MSMEs are significant contributors to economic growth. FNB’s strong capacity to support women-owned and agricultural businesses will help uplift communities and strengthen South Africa’s economy.”

Supporting National and Continental Development Priorities

The operation aligns with several core development strategies:

• AfDB’s Ten-Year Strategy (2024–2033) Focus areas: inclusive growth, gender equality, private-sector development

• AfDB’s Four Cardinal Points Promote job creation, economic diversification, resilience, and equality

• South Africa’s MSME Development Framework Aims to expand access to finance and support entrepreneurship

• Continental Free Trade and Industrialization Goals Enabling SMEs to participate competitively in regional value chains

Unlocking Growth, Jobs, and Economic Inclusion

South Africa’s MSMEs are responsible for more than 60% of employment but remain chronically underfinanced. This new $310 million partnership provides catalytic support to:

• Expand credit to underserved businesses

• Uplift women entrepreneurs and rural farming communities

• Support agribusiness modernization

• Create jobs and new income streams

• Drive post-pandemic economic recovery

• Strengthen financial inclusion through innovative credit tools

By equipping thousands of MSMEs with access to affordable finance and technical support, the AfDB and FirstRand are laying the groundwork for a more dynamic, resilient, and inclusive South African economy.