Johannesburg, South Africa, 29 January 2018 –
IFC, a member of the World Bank Group, has announced that it will extend a seven-year R740 million term loan to Mercantile Bank Limited, to allow the bank to grow its lending to South African small and medium enterprises, with a focus on women-owned SMEs.
The financing falls under the IFC SME Push Program, an initiative to expand lending and strengthen support for small and medium enterprises by the formal banking sector. The SME Push Program will channel up to R40 billion ($3 billion) investment into South African SMEs over the next 5-7 years through a comprehensive package, including investments, risk-sharing facilities and advisory services. The program was developed to complement government policies promoting lending to small and medium enterprises and to spur job creation in South Africa.
IFC support will promote Mercantile Bank’s efforts to sustainably grow the SME business and contribute more effectively to boosting productive economic activity and job creation. Mercantile Bank is promoting the development of local entrepreneurs and expanding its support to female business owners and to those from previously disadvantaged groups. Over the past five years, the bank has doubled its lending to SMEs and with this loan, will be positioned to have a positive impact on an even larger segment of the sector.
“It is encouraging to see that an institution like IFC recognises the opportunity for growth in South Africa, despite the current tough economic climate. Mercantile is also very proud of the continued confidence IFC has shown in the bank over an extended period. This loan will not only allow us to assist other businesses, but also enable us to expand our own business further,” said Karl Kumbier, the Chief Executive Officer of Mercantile Bank.
IFC Country Manager Saleem Karimjee said, “IFC welcomes the opportunity to boost Mercantile Bank’s impact within the SME community, especially its outreach to female entrepreneurs, who are still under-represented in the local market
.
IFC’s SME Push program is achieving good traction among South African financial institutions. With its unique market position and business focus, Mercantile Bank is an excellent partner in our quest to make a dent on South Africa’s unemployment challenge by offering access to finance to underserved and black-owned SME’s.”
IFC and Mercantile concluded a landmark securitisation transaction in 2014. Valued at R240 million, it saw the securitisation of Mercantile Rental Finance contracts and was the first of its kind in sub-Saharan Africa. Mercantile is also one of only two South African banks to be upgraded by Moody’s in 2017 and the agency has placed the bank on positive review for a possible further upgrade.
About IFC
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In FY17, we delivered a record $19.3 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. For more information, visit
www.ifc.org
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