The International Finance Corporation (IFC), a subsidiary of the World Bank Group, has given small and medium-sized enterprises (SMEs) an extra push with a programme that will inject billions of rand into these enterprises over the next five to seven years.

The SME Push Program loaned $200m to FirstRand on Friday, which the banking group is expected to on-lend to SMEs through its retail banking franchise FNB.

"SA has an estimated 2.3-million micro, small and medium-sized enterprises, which are by far the biggest source of employment accounting for 60% of total existing jobs in the country," said John Wilson, manager at the IFC sub-Saharan Africa financial institutions group.

"The loan will support SMEs, and will be cross-cutting. Our primary focus is enabling job creation, and encouraging the banks to provide financing to a wider section of the SME market."

The IFC programme adds to a proposed R47bn in targeted funding from the financial services sector, captured in a revised Financial Sector Code, for a black business growth, or SME fund, as well as a R1.5bn commitment from the SA SME Fund established by the CEO Initiative.

Wilson said the IFC initiated the programme as it believed SA’s banks could and should do more to reach unbanked SMEs, providing credit to them and helping grow the economy.

Over the next five to seven years, the programme aims to widen its network to Standard Bank, Absa and Nedbank, providing up to $3bn in the form of investments, risk-sharing facilities, and advisory services.

Wilson said one-third of this amount would be in hard cash, while two-thirds would involve risk-sharing arrangements.

"While funding supports the banks to do more SME lending to existing clients and within existing risk appetite, the risk sharing facilities are meant to support the banks to lend to unbanked and underbanked segments, to move their risk appetite, which in addition to job creation also supports more equal access to finance."

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