Washington D.C., June 7, 2001—The International Finance Corporation, the private sector lending arm of the World Bank Group, has signed an agreement to provide a ZAR 425 million (about US$42 million equivalent) seven-year loan facility to African Bank, the leading micro-lending institution in South Africa—representing IFC’s largest investment to date in the country and its first fixed rate local currency facility in Sub-Saharan Africa.
With a market share of over 30 percent and assets in excess of US$500 million, African Bank—headquartered in Johannesburg—is the largest unsecured credit provider to low-income South Africans. It is the country’s 10th largest banking institution in terms of assets, the 6th largest in terms of profitability, and is listed on the Johannesburg Stock Exchange. African Bank will utilize IFC’s loan facility to support further growth in its micro-enterprise lending business and expand its personal loan business to low-income individuals. More than 60 percent of African Bank’s personal loan clients utilize their loans for education and housing.
Haydée Celaya, Director of IFC’s Sub-Saharan Africa Department, said, “In a market where the majority of employed South Africans still lack access to cash credit, financial institutions such as African Bank play a significant role in deepening financial markets and enabling previously disadvantaged people to participate in the economy.”
“African Bank was founded on the basic need for developmental finance in South Africa, and has been at the forefront of opening up the supply of credit to previously unbanked sectors of the South African economy,” said Leon Kirkinis, Chief Executive of African Bank Investments Limited (ABIL). “It is, therefore, appropriate,” he said, “that the IFC, which plays a leading role in developmental finance worldwide, has selected African Bank as its partner for this transaction.” Kirkinis also noted that ABIL had been a forerunner in the development of micro-enterprise finance through its subsidiary, the African Contractor Finance Corporation (ACFC).
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through the close of the last fiscal year on June 30, 2001, IFC committed more than US$31 billion of its own funds and arranged US$20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was US$14.3 billion.
