World bank arm International Finance Corporation – IFC on 15 July extended $15 million in credit lines to Stanbic Bank to widen its credit extension net to small and medium enterprises. The skew towards women owned businesses in this line is at least 25%. This comes at a time when access to finance is a massive hurdle in Africa especially for smaller business players depriving economies of economic growth potential.
Zambia’s entrepreneurs have difficulty in accessing the finance they need to grow due to informality in the market, high collateral requirements, and poor bank lending tools, according to a recent study by the World Bank Group. In particular, women-owned enterprises face a financing gap of about $474 million, equivalent to 16% of the total SME finance gap funding shortfall (The Global Findex Database, 2017).
“The funding from IFC is timely and fits with our SME strategy, which is aimed at leveraging our corporate banking ecosystem to identify new SMEs for funding,” said Leina Gabaraane Chief Executive Officer, Stanbic Bank Zambia.
“By 2022, we plan to quadruple the number of women-owned SME borrowers from 50 to about 200, representing an outstanding portfolio of 80 million Zambian kwacha, up from 16 million Zambian kwacha, he said.
Along with the financing, IFC will help Stanbic Bank enhance its environmental and social risk management system. This includes formulating detailed procedures for identifying, assessing, and managing risks and their impacts during the credit approval and monitoring process.
“IFC’s partnership with Stanbic Bank Zambia will expand access to finance for the country’s SMEs, enabling them to grow and create jobs,” said IFC Regional Director for Southern Africa, Kevin Njiraini.
“The project also marks a new frontier in IFC’s relationship with the Standard Bank Group, and we look forward to future engagement with the group’s other subsidiaries.”
IFC estimates that SMEs that receive financing through Stanbic Bank’s new line could create close to 3000 local jobs over the next five years.Stanbic Bank Zambia is a leader in the Zambian banking sector and has a market share of about 15% by total assets and 21% by loans. It will leverage its recently launched banking proposition for women, called Anakazi Banking, to attract women-owned enterprises.
This will be IFC’s second investment with Stanbic Bank Zambia after a $11 million subordinated loan in 2006.
Compiled by Kondwani Phiri