(Ecofin Agency) - Absa Bank, South Africa's third-largest bank by assets, will obtain a $50 million risk-sharing financial facility to provide loans to micro, small and medium-sized enterprises, and households.
The loans will be in local currency with medium to long-term repayment terms. The capital raised by Absa from the British agency CDC Group will be deployed to Covid-19 affected companies seeking financing.
"We are thrilled to once again partner with Absa. This is CDC Group's first risk-sharing facility, providing a local currency solution to micro, small and medium-sized enterprises, and households," commented Stephen Priestley, Director of Financial Services at CDC Group.
He said, “we believe this funding will support local financial institutions by diversifying their funding base and improving their ability to provide smaller loans to local businesses and hard-to-reach communities.”
This support comes at a time when commercial lending to businesses has been limited due to the economic challenges induced by the pandemic. Covid-19 and its impact on the economy have increased the need for financing for SMEs. Absa Bank, therefore, plans to strengthen its financing solutions on the continent.