JOHANNESBURG - China's Development Bank (CDB) on Friday announced the conclusion of a $100million (R1.3billion) Special Facility Agreement to fund small and medium-sized enterprises (SMEs) in Africa.
Absa, a subsidiary of Barclays Africa, said the money will benefit Barclays Bank’s existing and prospective SME clients across the continent.
The $100m will address the current funding needs, and may be increased in the future to assist with new funding opportunities within Barclays’s operations, both banks said on Friday.
“We are glad to partner with CDB on this landmark transaction, which also echoes the 2017 Brics theme of "Stronger Partnership for a Brighter Future", said Craig Bond, head of partnerships, joint ventures and strategic alliances at Barclays Africa.
Assist SMEs
The funding is expected to assist the African SMEs, which often face funding shortages. SMEs on the continent have the potential to boost economic growth and create employment.
Absa and the CDB had concluded the $100m Special Facility Agreement to fund small and medium-sized enterprises (SME) in Africa.
The $100m would address the current funding needs, and might be increased in the future to assist with new funding opportunities within Barclays’s operations, both banks said on Friday.
Siphethe Dumeko, the chief financial officer at Business Partners, a specialist risk finance company for formal SMEs operating in South Africa, said that the past few months had proved difficult for many SME owners.
“We have seen evidence of this reflecting in the increase in net credit losses in our financial results for the year ended March 31, 2017.”
Opportunities
Dumeko said that despite the evidence of certain sectors showing growth opportunities for entrepreneurs, well-researched business concepts with solid fundamentals and good management were becoming more important for any risk financier across any sector and business offering in the low-growth economic environment.
“The reduction in the repo rate by 25 basis points last month by the SA Reserve Bank should be viewed as a positive signal to stimulate the much-needed growth for SMEs to thrive,” Dumeko said.
Mike Anderson, founder and chief executive of the National Small Business Chamber, said that there were many mixed messages when it came to the state of local entrepreneurship, but what remains was the key to continue working towards building a culture of self-employment and sustainability.