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IFC invests in Stanbic Bank to support SME growth in Zambia

Zambia’s entrepreneurs battle to access finance due to informality in the market, high collateral requirements, and poor bank lending tools.

Picture: iStock

IFC, a member of the World Bank Group, has announced a 200 million Zambian kwacha (approximately $15 million) loan to Stanbic Bank Zambia, a wholly owned subsidiary of Standard Bank Group. The investment will help Stanbic Bank expand its lending to small and medium enterprises, with at least 25% of the loan earmarked for women-owned businesses in Zambia.

Zambia’s entrepreneurs have difficulty in accessing the finance they need to grow due to informality in the market, high collateral requirements, and poor bank lending tools, according to a recent study by the World Bank Group.

In particular, women-owned enterprises face a financing gap of about $474 million, equivalent to 16% of the total SME finance gap funding shortfall (The Global Findex Database 2017).

The funding from IFC is timely and fits with our SME strategy, which is aimed at leveraging our corporate banking ecosystem to identify new SMEs for funding.

Leina Gabaraane, chief executive officer - Stanbic Bank Zambia.

By 2022, we plan to quadruple the number of women-owned SME borrowers from 50 to about 200, representing an outstanding portfolio of 80 million Zambian kwacha, up from 16 million Zambian kwacha.

Leina Gabaraane, chief executive officer - Stanbic Bank Zambia.

Along with the financing, IFC will help Stanbic Bank enhance its environmental and social risk management system. This includes formulating detailed procedures for identifying, assessing, and managing risks and their impacts during the credit approval and monitoring process.

IFC’s partnership with Stanbic Bank Zambia will expand access to finance for the country’s SMEs, enabling them to grow and create jobs.

Kevin Njiraini, regional director for IFC - Southern Africa

The project also marks a new frontier in IFC’s relationship with the Standard Bank Group, and we look forward to future engagement with the group’s other subsidiaries.

Kevin Njiraini, regional director for IFC - Southern Africa

IFC estimates that SMEs that receive financing through Stanbic Bank’s new line could create close to 3,000 local jobs over the next five years.

Stanbic Bank Zambia is a leader in the Zambian banking sector and has a market share of about 15% by total assets and 21% by loans. It will leverage its recently launched banking proposition for women, called Anakazi Banking, to attract women-owned enterprises.

This will be IFC’s second investment with Stanbic Bank Zambia after a $11 million subordinated loan in 2006.

Click here to read more from the Gender Equality archive.

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