Barclays Africa aims to raise R1.3bn to fund SME loans

Barclays Africa CEO Maria Ramos. Photo : Supplied 3

Barclays Africa CEO Maria Ramos. Photo : Supplied 3

Published Jul 5, 2016

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Johannesburg - Barclays Africa yesterday announced plans to raise R1.3 billion to fund loans to small and medium enterprises (SMEs) by the end of this year.

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The bank said the funding was part of “shared growth” – Barclays Africa’s commitment towards improving socio-economic conditions in the 12 African markets in which it operated and would follow its R1.4bn investment in education and skills training over the next three years.

Barclays Africa chief executive Maria Ramos said the bank would raise the funds together with its corporate partners, development financial institutions and global financial bodies.

Ramos said the group would unlock R1.3bn in SME funding by the end of this financial year to realise opportunities for SMEs to do business with the bank and its clients.

“I am delighted to say that many of our corporate clients are excited by the prospects of making a difference in this way. They are as keen to give SMEs better access to their procurement chains as we are,” she said as she made the announcement at Barclays Africa’s headquarters in Johannesburg.

“In the South African context there is always a discussion about economic transformation. Real transformation means access to capital, to business development expertise and corporate procurement chains.

“Raising the R1.3bn is not the challenge. The challenge is to get the right pipeline of projects.”

Speaking on the sidelines of the event, KeaObaka Mahuma, the head of Barclays Africa’s enterprise and supply chain development, said emerging SMEs involved in producing and supplying goods and services to corporate clients would be able to apply for funding.

Mahuma said the idea was to raise funds and be able to present loans to SMEs at attractive rates.

Raising funds

“You find that it is quite difficult for SMEs trying to raise funds. They do not have a strong balance sheet or collateral. We are working with corporates to help de-risk the companies. Corporate supply and corporate distribution firms have indicated that they are willing to work with small business,” he said.

SMEs are said to contribute between 34 percent and 50 percent of gross domestic product, and contributed about 60 percent to South Africa’s employment. However access to financial support has been one of the biggest hindrances for SMEs, which were seen by banks as high risk with a high chance of failure and most could offer no collateral security.

Unemployment in South Africa was also driven by a lack of skills, Ramos noted.

“Graduates have a better chance of finding employment than those without a skill. This does not mean all graduates are employed, but the (first quarter) Quarterly Labour Force Survey shows very clearly that over 90 percent of the unemployed either have no matric or just have matric and no other type of skill,” Ramos said.

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