AfDB, Standard Bank collaborate to enhance SMME financing and boost African trade

AFRICA – In a move to bolster small, medium, and micro enterprises (SMMEs) and enhance trade across Africa, the African Development Bank Group (AfDB) and Standard Bank Group (SBG) have formalized a financial agreement. 

This collaboration encompasses a R3.6 billion (US$192.6M) investment in a social bond and a US$200 million Risk Participation Agreement (RPA) for Standard Bank of South Africa Limited (SBSA), aiming to strengthen SMME support and trade finance across the continent.

Investment in social bond to empower SMMEs

The social bond investment is designed to promote inclusive economic development by targeting SMMEs with an annual turnover below R300 million (US$16M) and loan requirements under R40 million (US$2.1M). 

This funding is projected to support up to 4,000 businesses, enabling them to expand operations, generate employment, and contribute to economic resilience.

Kenny Fihla, Deputy Chief Executive Officer of Standard Bank Group and Chief Executive Officer of SBSA, emphasized the significance of this initiative, noting that with approximately 3.2 million SMMEs accounting for 60% of jobs in South Africa, ensuring access to finance is crucial. 

This initiative aligns with Standard Bank’s Sustainable Finance Framework and commitment to financial inclusion.

Risk participation agreement to enhance trade finance

Beyond supporting SMMEs, the agreement’s US$200 million RPA component will enhance trade finance across Africa, with a special focus on low-income countries and transition states. 

By sharing risk with local banks, this arrangement will help bridge trade finance gaps, increase liquidity, and promote intra-African trade.

Leila Mokaddem, Director General for Southern Africa at the African Development Bank, highlighted the broader economic impact, stating that expanding financial inclusion and trade opportunities empowers businesses to drive economic transformation and regional integration. 

The Standard Bank Group remains a strategic partner in the shared vision for economic development on the continent.

Alignment with strategic development goals

This initiative aligns with the African Development Bank’s Ten-Year Strategy (2024–2033), which prioritizes industrialization, regional integration, and improving the quality of life in Africa. 

It also supports Standard Bank’s Sustainable Finance Framework, reinforcing both institutions’ commitment to fostering green and inclusive growth.

Ahmed Attout, Director of the Financial Sector Development Department at the African Development Bank, remarked that supporting businesses creates long-term economic opportunities and financial resilience.

Recent AfDB initiatives in agro-industrial development

In a related development, the African Development Bank recently facilitated US$2.2 billion in capital mobilization for Nigeria’s Special Agro-Industrial Processing Zones (SAPZ) Phase II project during the Africa Investment Forum. 

This funding aims to establish agro-industrial hubs, enhance food security, create jobs, and boost productivity across Nigeria. 

The program, currently operational in eight states, including Cross River, Oyo, and Kano, will expand to 24 additional states during its second phase.