Financing Frontiers: Navigating SME Financing Dynamics with DFIs

With more than half of all South Africans employed by SMEs, these economic powerhouses contribute more than a third of the country’s gross domestic product (GDP), meaning we have to do everything we can to ensure they succeed.

But securing financing remains a significant hurdle for most SMEs looking to expand, even more so for those run by women. There’s a reason why an estimated 35% of all loans made to SMEs are in the form of personal loans: entrepreneurs simply find accessing business funding too difficult.

And for women-led businesses, the funding challenges are magnified: from perceived skill deficits to gender bias to a historic lack of access to capital. To help close this concerning funding gap, Development Finance Institutions (DFIs) have made their mark across the developing world by helping to facilitate transformative loans, or even providing access to their own financial instruments.

As part of the private banking sector, I see firsthand the profound effects of collaboration between a business, a bank, and a DFI – but also the role private institutions play in securing finance for SMEs, corporates, and the SMEs that will one day be corporations.

Absa is unique in this sense, in that we already have relationships with some of the world’s largest DFIs, acting as a facilitator for our corporate and SME clients to access funding from these institutions. DFIs enable Absa to extend credit to businesses that are poised for growth but may lack traditional collateral. These partnerships also foster innovation in financial solutions, such as the creation of guarantee schemes that bridge the funding gap for women entrepreneurs.

An oft-cited McKinsey study posited that equal access to economic opportunities for women could add $28 trillion to global GDP in the coming years. Supporting these businesses is not just about achieving gender equality; it’s an economic imperative.

At Absa Corporate and Investment Banking, we believe in unlocking the potential of every entrepreneur, particularly women. Through our Growth Capital Solutions (GCS) division, we offer tailored financial solutions that empower underserved business leaders, focusing on Broad-Based Black Economic Empowerment (BEE) entities, women, and youth. What sets GCS apart is its ability to give high-growth SMEs access to CIB’s suite of products, even before they reach the typical corporate client threshold. This ensures businesses can benefit from resources designed to propel them to new heights.

GCS also provides strategic guidance and tailored financial tools for businesses transitioning from SME status to larger enterprises. Our focus is to create an environment where women industrialists can thrive, unlocking new opportunities for growth and innovation. While we act as a facilitator, helping our clients to understand the complexities of these business funding applications, we also have initiatives across Africa providing women-led businesses with access to affordable financing, business development skill training, and products designed specifically to help a small business flourish.  This is embodied in our She Thrives service, which breaks down barriers for women-led businesses through the provision of transactional accounts, business support, networking events, and more.

Imagine the impact if every aspiring woman entrepreneur had access to the support and resources needed to succeed. Let’s build a future where women entrepreneurs are not just participants but leaders in driving economic transformation. We want to be their partner, facilitator, and financier, so we can tell their stories of success and expansion. Because their stories matter.