The Standard Bank of South Africa has signed a three year loan agreement with the International Financial Corporation to help SMEs that have been affected by the current economic crisis.
The ongoing economic crisis caused by the coronavirus pandemic has drastically affected South African SMEs. With the current scenario, access to finance for small businesses is getting restricted, making it impossible for SMEs to grow. For this reason, funding becomes of paramount importance.
SMEs and operable consumer market are crucial to South Africa’s economic growth. Standard Bank has already helped its small business clients with payment relief with a turnover of less than R20 million.
Lungisa Fuzile, the chief executive of Standard Bank said at that time “The relief will come from capitalising the interest and fees typically paid to the bank each month and changing the terms of repayment to a later date. This, we hope, will relieve cash flow constraints currently caused by the Covid-19 outbreak.”
However, to really give support to these SMEs to grow, a new agreement on loans for small businesses was needed.
As a response to the ongoing circumstances, the Standard Bank has decided to offer new measures to support the most affected South African SMEs by signing a $185m three year agreement with the International Financial Corporation, focusing especially on the private sector.
According to Standard Bank, the funds’ aim is to support eligible enterprises and to help the companies that have been hit by the economic crisis caused by the coronavirus pandemic by assisting them with economic support for the purchasing and production of materials needed to overcome the crisis and as a stimulus to help for investments.
“The loan proceeds will be used for immediate relief and ongoing support for eligible Small and Medium Enterprises (“SMEs”) and corporates in South Africa that have been affected by Covid-19 by assisting them with the purchase and production of goods and services needed to cope with the crisis and towards stimulating long-term investments in affected industries.”
Lungisa Fuzile stated “We take our responsibility as a corporate citizen seriously and value the ongoing collaboration with IFC. This transaction reflects Standard Bank’s commitment to supporting our clients through this pandemic.”
On the other side, Adamou Labara, IFC Country Manager for South Africa said “This is an unprecedented crisis, with devastating health, economic and social consequences. Our experience from past shocks has taught us that keeping companies solvent is key to saving jobs and limiting the economic damage. That’s why it’s critical to work with institutions like Standard Bank to help companies access finance that will enable them to continue to operate during this time.”
This agreement will increase the possibility of financing for the areas most affected by the coronavirus crisis. This would be a strategy that will help the private sector to strengthen economic recovery.
Lungisa Fuzile added “Standard Bank recognises the importance of embedding social, economic and environmental considerations into its lending decisions and business practices. We acknowledge that its success is intricately linked to the prosperity and wellbeing of our clients and the societies in which we operate.”
These measures taken by Standard Bank are complementary to the coronavirus pandemic relief measures already provided to customers. Right after the national lockdown had started, Standard Bank had extended their help with R92 billion for individuals, SMEs and customers in South Africa. R11 billion was provided to customers in the African Regions in 14,000 accounts as well. Additionally, corporate client restructurings for eligible clients with risk exposures of approximately R30 billion had been concluded.
