Strategic partnerships between banks and Development Finance Institutions (DFIs) are crucial to help drive inclusive growth in SA through SME funding.
A core component of FNB’s ability to lift the barrier to SME funding at scale is its partnerships with DFI’s, which enables the bank to scale lending at lower interest rates, and to unlock lending that would not fall under traditional commercial risk tolerances.
By partnering with DFIs, the bank can derisk social-development initiatives, including sustainability and SME-support programmes, and extend finance in line with its commercial and fiduciary obligations.
By June 2024, the bank had contracted R33.2 billion in DFI-supported funding, including R13.2 billion to SMEs, R1.6 billion to women in business, R0.9 billion for affordable housing, and R16.5 billion for green buildings, renewable energy, and climate adaptation.
The result is a win-win-win: SMEs can access critical finance, supporting their ability to make capital investments, manage cash flow, and expand into new markets; and we can deliver on our goals of shared prosperity; and the DFIs deliver on their mandate to support socio-economic development.
We are focused on growth that is inclusive and transformational, and we know that SMEs are vital drivers of this growth. Through our partnerships with DFIs we can extend this support beyond the traditional parameters of commercial lending arrangements, at no greater risk to our shareholders. In April 2025, FNB announced a R1.8 billion credit risk-sharing facility in partnership with the International Finance Corporation (IFC) to help de-risk and scale up financing for SMEs. The credit risk-sharing facility is part of the IFC’s Small Loan Guarantee Program, supported by a financial guarantee from the European Commission’s European Fund for Sustainable Development.
This provides FNB’s SME portfolio with an extra R1.8 billion of risk capacity, as the IFC will cover 50% of all credit losses associated with the loans originated under this facility. The objective of the facility is to enable FNB to scale its lending to SME customers, particularly women-owned businesses and businesses involved in agricultural and rural sectors, climate resilience and healthcare.
At the end of last year, the Dutch Entrepreneurial Development Bank (FMO) and FNB announced the signing of an R847 million facility through NASIRA, to increase lending to small and medium-sized enterprises (SMEs) in South Africa, across a wide range of sectors. In addition to direct financial support, SMEs are typically able to access other benefits through these partnerships, including access to markets, digital inclusion and access to expertise.
DFIs will often support the provision of technical assistance, which could comprise additional monitoring and reporting, research or system development. Technical assistance might further derisk a project and contributes to institutional knowledge and capacity.
Getting access to the right funding at the right time can be crucial to enabling a business to succeed, as can access to the right advice. Our partnerships with DFIs allow us to broaden the funding solutions available to small businesses and expand our non-financial support networks as well. The result is a model of finance that accomplishes our goal of shared prosperity, and sets South African SMEs on course to grow, create jobs, and contribute to South Africa’s economic revival.
DFI partnerships are testament to the benefits of the alignment of local knowledge, global experience, and a shared commitment to holistic value creation. The result is that SMEs are given a unique opportunity to thrive.
The forum’s objectives, of championing SMEs through financial & non-financial support, and driving inclusion, especially for women in business, tie directly into the ethos of shared prosperity and the development initiatives made possible through FNB’s DFI partnerships.
Linnet Mhishi, Client Strategy Head for FNB Business
Soweto Sunrise News
