African Bank Ups its MSME Game

African Bank has launched a fully online Micro, Small & MediumEnterprise (MSME) lending platform, offering business term loans, revolving lines of credit and invoice financing. The new solution, initially targeted at MSMEs with an annual turnover of R1-million or more, will  provide funding starting from R20 000 (ZAR) and up to R5 million.

The new financial product comes with a promise for speedy application processes – that applications will be processed online and payouts made in as little as 48 hours from receiving a completed application, removing traditional barriers and speeding up business support.

Start-up Challenges for Funding Persist

Fifty years ago, African Bank’s founders, Dr Sam Motsuenyane, Dr Richard Maponya and others, lived the very challenges black entrepreneurs still face today. As pioneering entrepreneurs, they created a bank for the people, by the people, serving the people because the system had shut them out.

Their stated mission was to provide access to personal banking, as well as to empower businesses like their own to grow and thrive. That founding spirit continues on today in the bank’s business and commercial division as a modern response to an age-old struggle: unlocking capital for those building South Africa from the ground up.

Zweli Manyathi, CEO of Business and Commercial Banking at African Bank, says: “The same determination that built African Bank 50 years ago still drives us today. We are here to ensure that the enterprises are given the opportunities to grow, create jobs, and build a better South Africa. Too many viable enterprises continue to be excluded from the financial system, not because they lack potential, but because they do not fit old models.”

Growing Focus on MSME

The launch follows African Bank’s sponsorship of the SA MSME Access to Finance Report, produced in partnership with Finfind. Based on over 10 000 verified funding requests and 605 finance products, the report paints a clear picture: micro enterprises (those with turnovers under R1 million) account for the majority of job creation but remain the most underfunded, which is why this is the bank’s first step on a journey to address these needs. 

“African Bank hopes that the findings of this report will encourage investors to adopt the spirit of our founders and create new opportunities for collaboration with MSMEs,” Manyathi adds.

Key Findings:

– The MSME funding gap is very large (R350 billion). Increased and improved access to funding is imperative to ensure the growth of this vital sector and the economy at large; the lack of funding readiness is one of the primary challenges for MSMEs applying for financial support.

– The scarcity of business credit data continues to impede MSME funding, especially for traditional banks and development finance institutions. Reforms in credit scoring models for MSME funding are urgently needed.

– MSMEs across all business sizes are predominantly looking for funding of less than R5-million, and the bank’s digital lending product answers that need, quickly, easily, and hassle-free.

– Financial documentation required by funders is a clear challenge for businesses, with only 49.3% having latest management accounts, 36.8% having financial statements, and 30.9% being able to provide a list of their outstanding debtors.

Expanding Product Range Aims to Address MSME Sector Needs

In response, African Bank has taken these insights into account in ensuring the online business loans offering provides fast, flexible, and accessible finance to businesses across various industries by using multiple data sources and minimal client documentation requirements, thus making it easier for MSMEs to secure funding. Additionally, finance fees are only applicable to the portion of the loan facility utilised.

“We see entrepreneurs as catalysts for change. Their courage and ingenuity hold the power to transform communities and uplift the economy. Our role is to remove obstacles and back their vision with real, responsive financial support,” Manyathi says.

This is the next step on the bank’s journey to expand its MSME offerings beyond lending to build a broader ecosystem of financial and non-financial support aligned to genuine business needs.