IFC will invest up to US$30mn in South African financial services firm, Sasfin. This will enable Sasfin to increase lending to South Africa’s small and medium enterprises, which often struggle to obtain funds from large commercial banks.
The World Bank Group member’s investment will consist of up to US$10mn in equity, a loan of US$10mn, and up to US$10mn in trade finance guarantees. 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 of South African companies.
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 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,” say Roland Sassoon, CEO of Sasfin. “Increased financing for small and medium enterprises is crucial for the sustainable development of South Africa’s private sector.”
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 current 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,” says James Scriven, IFC director for global financial markets. “IFC is committed to working with partners such as Sasfin to create more opportunities for South African businesses.”
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