9 July 2009
The International Finance Corporation (IFC), a member of the World Bank Group, is investing US$30-million (about R243-million) in South Africa’s Sasfin, enabling the financial services group to increase lending to small and medium enterprises (SMEs) that often struggle to obtain funds from large commercial banks.
The IFC’s investment will consist of up to $10-million in equity, a loan of $10-million, and up to $10-million in trade finance guarantees.
Increased lending, African expansion
Sasfin will use the funds to increase the products it offers to smaller businesses, strengthen its environmental and social lending practices, and boost foreign trade by South African companies.
The IFC will also support Sasfin as it expands operations across South Africa and potentially to other parts of Sub-Saharan Africa, including Malawi, Botswana and Ghana.
“The partnership with [the] IFC will strengthen Sasfin’s capital position during these volatile economic times and help expand lending to smaller businesses, an underserved segment of South African society,” Sasfin CEO Roland Sassoon said in an IFC statement this week.
“Increased financing for small and medium enterprises is crucial for the sustainable development of South Africa’s private sector.”
Creating jobs, boosting growth
The IFC’s investment will provide Sasfin with long-term capital, which has become increasingly expensive and scarce as many institutions cut back credit lines amid the global financial crisis.
By increasing financial services for smaller businesses, the partnership will also help create jobs and boost economic growth.
“An inclusive financial sector is crucial for developing a vibrant private sector that promotes economic development and helps reduce poverty,” said IFC Global Financial Markets director James Scriven.
“IFC is committed to working with partners such as Sasfin to create more opportunities for South African businesses.”
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