How SMEs in South Africa Are Set to Benefit from AfDB in 2025

The African Development Bank Group (AfDB) has approved two significant financial facilities for the South Africa-based Standard Bank Group. This move is poised to have a transformative impact on small and medium-sized enterprises (SMEs) and trade financing across the continent, marking a promising start to 2025.

The first initiative is a $200 million trade finance risk participation agreement (RPA) for Standard Bank of South Africa Limited. This agreement is designed to scale up trade finance support for local banks, enhancing their capacity to provide much-needed financial backing to businesses, including those in low-income countries and transitional states. The RPA, by addressing trade financing constraints, is set to promote intra-African trade and help close the trade finance gap, which has long hindered regional economic development.

The second facility involves a ZAR 3.6 billion investment in a social bond issued by Standard Bank Group, an innovative approach to sustainable financing. The social bond, which will be listed on the Johannesburg Stock Exchange, will channel its proceeds towards SME lending initiatives under Standard Bank’s Sustainable Finance Framework. This move is expected to empower SMEs in South Africa, enabling them to grow and contribute more significantly to the economy.

Commenting on the partnership, African Development Bank Vice President for Private Sector, Infrastructure, and Industrialization Solomon Quaynor said: “This partnership between the African Development Bank and Standard Bank Group exemplifies our commitment to driving sustainable economic growth in Africa. By supporting SMEs and fostering inclusive financial solutions, we are taking significant steps towards achieving our vision of a prosperous continent where every individual has the opportunity to thrive.”

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The collaboration aligns with AfDB’s new Ten-Year Strategy (2024–2033), which focuses on industrialization, regional integration, and improving the quality of life for all Africans. By bolstering Standard Bank Group’s capital, the initiative will not only support SMEs but also contribute to the broader goal of economic transformation across the continent.

Standard Bank Group’s Deputy CEO and CEO of Standard Bank of South Africa Limited, Kenny Fihla, highlighted the significance of the funding structure.

“Structuring the funding as a social bond highlights the importance of the group’s social impact and aligns with the continued support of our existing strategy within our Business and Commercial Banking division to drive financial inclusion through lending to SMEs in our biggest market, South Africa,” he said.

AfDB Director for Financial Sector Development Ahmed Attout commended Standard Bank’s dedication to sustainability, emphasizing the innovative nature of the social bond and its potential to drive meaningful change in key financial segments.