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 South Africa’s leading commercial banking franchise, FNB. This historic package aims to significantly expand access to finance for micro, small and medium-sized enterprises (MSMEs) across South Africa, with a focus on women-led enterprises, 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, where MSMEs employ millions of people but continue to face widespread barriers to accessing financing.
Strategic partnership to transform access to finance for MSMEs
FirstRand Bank, a wholly owned subsidiary of FirstRand Group, leverages its broad national footprint and strong small business portfolio to provide financing through its commercial banking division, FNB.
AfDB support includes three main components:
$200 million credit facility for on-lending to MSMEs across all major economic sectors, from retail and services to manufacturing, transportation and green enterprises.
$100 million gender-focused financing facility for women-led and women-owned MSMEs, addressing persistent funding gaps that limit the growth potential of South African women entrepreneurs.
A $10 million concessional loan facility provided through the Agri-Food Small Business Catalytic Financing Mechanism (ACFM). It is particularly ring-fenced for women-owned agribusiness and women-led small-scale farming operations.
This structure makes the package one of the most gender-sensitive lending solutions ever approved by South African Bank.
Prioritizing women entrepreneurs: Packaging basics
More than a third of the total funding, or $110 million, is earmarked for women. This is directly in line with AfDB’s flagship initiative AFAWA (Affirmative Financial Action for Women in Africa), which aims to mobilize $5 billion in finance to women-led businesses across Africa.
Most women-owned businesses in South Africa remain economically excluded due to limited collateral, limited credit ratings, and systemic inequalities. Women farmers in particular have historically struggled to receive formal credit despite being essential contributors to rural food production.
The package’s concessional elements will enable FNB to offer more favorable interest rates and flexible repayment terms to women-owned agricultural SMEs, creating a pathway for growth in a sector that is central to rural livelihoods and national food security.
Complementary support: technical assistance and performance incentives
In addition to financing, AfDB also provides:
Technical assistance to improve the bankability of women-owned MSMEs
Support for strengthening FNB’s agricultural financial services
Exploring alternative and comprehensive credit scoring mechanisms
Performance-based incentives (PBI) under AFAWA and ACFM are designed to reward FNBs for reaching underserved market segments.
These measures are aimed at building long-term institutional capacity, improving credit risk assessment methods, and enabling financial institutions to sustainably serve MSMEs beyond the loan term.
Leaders welcome agreement
AfDB and FirstRand executives welcomed the approval as a milestone towards inclusive development.
AfDB Southern Africa Director Kennedy Mbekeani highlighted the Bank’s commitment to private sector-led growth.
“By channeling resources through FirstRand and especially FNB, we are partnering with trusted institutions to ensure that MSMEs, especially women entrepreneurs, have access to the finance they need to grow, create jobs and support the development of the country.”
Commenting on the package’s innovative focus, Ahmed Atout, AfDB’s Director of Financial Sector Development, said:
“This funding underscores our commitment to empowering credit-disadvantaged communities, advancing our shared goals of fostering inclusive growth and supporting women-owned businesses and small farmers.”
Bhulesh Singh, Head of Finance, FirstRand Group, highlighted the impact on the nation:
“MSMEs contribute significantly to economic growth. FNB’s strong ability to support women-owned and agricultural businesses will help uplift communities and strengthen the South African economy.”
Supporting national and continental development priorities
This operation aligns with several key development strategies:
AfDB’s 10-year strategy (2024-2033) Focus areas: Inclusive growth, gender equality and private sector development
AfDB’s four key 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 small and medium-sized enterprises to participate competitively in regional value chains
Delivering growth, jobs and economic inclusion
MSMEs in South Africa are responsible for more than 60% of employment, but they remain chronically underfunded. This new $310 million partnership will provide catalytic support to:
Extending trust to underserved businesses
Uplifting women entrepreneurs and rural communities
Supporting agribusiness modernization
Create jobs and new sources of income
Accelerate economic recovery after the pandemic
Strengthening financial inclusion through innovative credit tools
By providing thousands of MSMEs with access to affordable finance and technical support, AfDB and FirstRand are laying the foundations for a more dynamic, resilient and inclusive South African economy.
